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10.1177/0885412203254706ARTICLE Journal of Planning LiteratureCPL Bibliography 370CPL Bibliography

370

Regional Development Theory:

Conceptual Foundations, Classic Works,and Recent Developments

Casey J. Dawkins

This annotatedbibliographygives an overview of the theoret-

ical literature on regional economic growth and examines itsconceptual foundations, major competingparadigms, and re-centdevelopments.Theoverviewconcludeswitha discussionof the policy implications suggested by this body of theory.Throughout the review, three themes are emphasized: (1) thetheoretical predictions regarding the convergence or diver-

gence of per capita incomes across regions over time, (2) theassumptions regarding the importance of internal and exter-nal scale economies to regional economic growth, and (3) therole of space in shaping regional labor market outcomes.

Keywords: regional development theory; regional plan-ning; economic development; convergence

TABLE OF CONTENTSI. Introduction

A. What Is a Region?B. Conceptual Foundations of Regional

Economic Development Theory

1. The Interregional Convergence

Hypothesis2. Location Theory and Regional Science3. External Economies4. Models of Spatial Competition5. Central Place Theory

C. Alternative Theories of Regional EconomicDevelopment1. Theories of Regional Economic

Convergencea) Export Base Theory

b) Neoclassical Exogenous Growth Theory

C ASEY J. D AWKINS is an assistant professor of urban affairs and planning at Virginia Polytechnic Institute and State University. His doctoral dissertation at the Georgia Institute of Technologyexaminedthe connectionbetweenTiebout choice andresidential seg-regation by race.

Journalof PlanningLiterature,Vol.18,No.2 (November2003).DOI: 10.1177/0885412203254706Copyright © 2003 by Sage Publications



2. Theories of Regional EconomicDivergencea) Cumulative Causation Theory

b) Growth Pole Theory3. Structuralist Theories

a) Stage/Sector Theories b) Profit/Product Cycle Theories

c) Industrial Restructuring Theoriesd) Flexible Specialization and NetworkTheory

e) Marxist Theory4. Political Institutions and Regional

Economic Developmenta) Growth Machine Theory

b) The New Institutional Economics5. Emerging Neoclassical Perspectives

a) Endogenous Growth Theory b) The New Economic Geography

6. Conclusion: Toward an Integrated Theoryof Regional Economic Development

D. Theoretical Perspectives on the Role of Regional Development Planning and Policy

E. ReferencesII. Annotated Bibliography

A. What Is a Region?B. Conceptual Foundations of Regional

Economic Development Theory1. The Interregional Convergence

Hypothesis2. Location Theory and Regional Science3. External Economies4. Models of Spatial Competition

5. Central Place TheoryC. Alternative Theories of Regional EconomicDevelopment1. Theories of Regional Economic

Convergencea) Export Base Theory

b) Neoclassical Exogenous Growth Theory2. Theories of Regional Economic

Divergencea) Cumulative Causation Theory

b) Growth Pole Theory3. Structuralist Theories

a) Stage/Sector Theories b) Profit/Product Cycle Theoriesc) Industrial Restructuring Theoriesd) Flexible Specialization and Network

Theorye) Marxist Theory

4. Political Institutions and RegionalEconomic Development

a) Growth Machine Theory

b) The New Institutional Economics5. Emerging Neoclassical Perspectives

a) Endogenous Growth Theory b) The New Economic Geography

6. Conclusion: Toward an Integrated Theoryof Regional Economic Development

D. Theoretical Perspectives on the Role of

Regional Development Planning and PolicyE. Other Reviews of the Regional Development

Theory LiteratureIII. AcknowledgmentsIV. Author Index

I. INTRODUCTION

“How do regions grow?” “Why do some regionsgrow more rapidly than others?” “Why are differencesin levels of social welfare across regions so persistent?”These central questionshave attractedtheattention of a

diverse group of scholars during the past fifty years.Topics that were initially of interest only to economistsand geographers are now being investigated by sociol-ogists, political scientists, and researchers from othersocial science disciplines. This growing interest inregional development studies is due in part to the rec-ognition that the processes driving innovation andnational economic growth are fundamentally spatial innature. In short, “space matters.”

This review and annotated bibliography give anoverview of the theoretical literature on regional eco-nomic growth. The reviewis intended toserve as both asummary of the state of the field and an overview bibli-

ography for use in a graduate course on this topic.Given that this field of inquiry spans several works inseveral disciplines,no attempt wasmade to give a com-prehensive survey of all works in the field. Instead, Ireviewed seminal works and comprehensive over-views of the most important theoretical concepts.Empirical works were not examined unless they con-tributed substantially to theory development. Theannotated bibliography follows the same structure asthe introduction. Within the annotated bibliography,references are organized alphabetically by section, butnot every reference has a separate explanatory para-graph. The reference list at the end of the introductiononly includes works notdiscussed in theannotated bib-liography. To locate references in the annotated bibliog-raphy, the reader may refer either to the author index(section IV)or thesectionof theannotated bibliographythat corresponds to the section in the introduction.

Thereview places emphasis on three themes that arediscussed throughout the regional development litera-ture: (1) the theoretical predictions regarding the con-

132 Journal of Planning Literature



vergence or divergence of per capita incomes acrossregions over time, (2) the assumptions regarding theimportance of internal and external scale economies toregional economic growth, and (3) the role of space inshaping regional labor market outcomes. The final sec-tion of the paper examines several seminal articles inthe regional economic development policy literature inlight of thetheoriesdiscussed todeterminewhat theoryhas to say about the role of policy and planning inachieving thesocial welfare objectives of efficiency andequity.

A. What Is a Region?

What is meant by the term region? Although allregional development theorists are interested in under-standing the process of regional growth and decline,there is surprisingly little agreementamongresearchersas to how regions should be defined. Some theoristsmerelypresume thea prioriexistenceof a cohesivegeo-graphic and economic entity known as a region,whereasothers base theory onmoreexplicitdefinitions.A few of the most common approaches to definingregions are reviewed below.

Christaller (1933) and Losch (1954) provide an earlyapproach to defining a region. In Christaller andLosch’s central place theory, regions aredefinedas hier-archical systems of central places or cities. Each regionhas a small number of large higher order cities and alarge numberof smaller lower order cities. Theorder of a city is determined by the diversity of goods offered inthe city, which in turn is determined by the relative sizeof market areas for different goods. Cities are assumed

to import goods from higher order cities, export goodsto lower ordercities, andnotinteractwith other citiesof the same order. Alimitation of this definition is that it isonly useful as a way to determine the spatial structureof regions that house market-oriented (as opposed tolabor- or input-oriented) firms.

A more popular approach among more recent theo-rists has been to define a region in terms of a spatiallyinterdependent, or “nodal,” labor market. According toHoover and Giarratani (1985), nodal regions have twocharacteristics: (1) they are functionally integratedinternally to theextent that labor, capital, orcommodityflows are more common within the region than withanother region, and (2) within the region, activities areoriented toward a single point, or node, where there isthe presumption of dominance or order of the nodeover the surrounding peripheral area. Richardson(1979) extends the nodal concept to include polycentricregions that have several nodes andseveral peripheries

but that exhibit high degrees of internal functionalintegration.

Karl Fox’s “functional economic area” concept (Foxand Kumar 1994) is a variation on the nodal approachthat is based onthe viewthatthe dominance ofa centralnode over the surrounding periphery is attributable tothespatial dependence of workers on adjacent employ-ment centers. This approach provides a conceptual

basis for the delineation of economic areas, as defined bythe United States Department of Commerce Bureau of Economic Analysis. For several practical and theoreti-cal reasons, theorists have found Fox’s functional eco-nomic area concept to be quite useful. First, since laboris the unit of measurement, there is a clear correspon-dence between regional analysis and social welfareanalysis. If regions were defined in terms of geographicunits that did not correspond to the location of the pop-ulation, it would be difficult to determine the humanimpacts of changes within particular regions,especiallyif some regions hadlittleor nopopulation base. Second,unlike other definitions discussed later, the functionaleconomic area concept explicitly incorporates space

and spatial integration among economic units into thedefinition of a region. In the functional economic areadefinition, spaceis incorporated via worker transporta-tion costs. Third, there is a clear economic rationale forthe delineation of regions based on functionally inte-grated labor markets. Because workers desire to mini-mize transportation costs of commuting to work andemployers wish to minimize the cost of compensatinglabor for high commutes, functional economic areas aremore likely to correspond to the economic boundariesthat firmsand workers face in a spatial dimension. Thisallows regional analysts to examine regional problemsina mannersimilar to theway theproblems areencoun-tered by economic agents. Finally, large labor marketsalso serve as large consumer markets. Thus, a signifi -cant local labor market serves both as a resource forfirms that employ local workers and as a consumermarket for firms that wish to sell their products toworkers. Relying on labor as the unit of analysis rein-forces the patterns of interdependency among firmsand workers in the region.

The problem with this approach to defining regionsis that advances in communications and transportationtechnology have weakened many of the centripetalforces that tie suburban labor markets to central city

business districts for employmentneeds. If telecommu-nications are a substitute for face-to-face communica-tion, then workers can live in virtuallyany location andconduct economic activities from their homes. Simi-larly, if it is virtually costless to commute to work, dueto improvements to the land-based transportation net-work or declines in the cost of airline travel, workerscanlive farther from their employers. When theboundsimposed by transportation costs are lifted, workers are

CPL Bibliography 370 133



1. THE INTERREGIONALCONVERGENCE HYPOTHESIS

Most early theories of regional economic growthwere aspatial extensions of neoclassical economic theo-ries of international trade and national economicgrowth. Together, these early neoclassical theories pre-dict that over time, differences in the price of labor andother factors across regions will diminish and tendtoward convergence. This prediction has generatedconsiderable controversy among theorists, particularlyin light of the apparent tendency toward internationaldivergence between the per capita incomes of industri-alized nations and less developed nations. Early theo-ries of regional economic development emerged out of this controversy and can be distinguished from oneanother in terms of differences in the theoreticalpredic-tions regarding interregional convergence or diver-gence in per capita incomes and factor pricesover time.Thesetheoreticalresponsesare examinedin moredetailin the next section. First, it is important to look at the

interregional convergence hypothesis.Neoclassical trade theorists draw on the Heckscher-Ohlin-Samuelson (HOS) theorem to explain interna-tional factor price convergence using staticequilibriumtrade models. This well-known theory of internationaltrade begins with the following simplifying assump-tions (thisdiscussion drawsheavilyonSalvatore1998):

1. Two regions (1 and 2) trade two commodities (Aand B) using two factors of production.

2. Theproductionof A is labor-intensive, and thepro-duction of B is capital-intensive.

3. Bothregionsrelyonthesametechnologyinproduc-tion and have the same production functions.

4. There areconstantreturns to scale in theproductionof Aand B.

5. Both regions produce some of Aand some of B.6. Tastes are homogeneous across regions.7. Commodity and factor markets are perfectly

competitive.8. Factors are mobile within nations but not mobile

across nations.9. There are zero transportation costs.

10. Allresourcesare used up in theproduction of AandB.

11. Trade between 1 and 2 is balanced such that thevalue of regional exports is equal to the value of regional imports.

With theseassumptions, Heckscher(1919) andOhlin(1933) demonstrate that a factor-abundant region willhave a comparative advantage in the production of goods that require the intensive use of that factor. Thisregion will then specialize in and export the factor-abundant good and import goods for which factors of

production are scarce. This result can be explained asfollows:

If theassumption is made that themarkets forfactorsand commodities are perfectlycompetitive, the relativeabundanceof a factorin a givenregion canbe expressedin terms of the ratio of prices for the two factors. Laborabundance, for example, can be expressed in terms of the ratio of wages to interest rates. If labor is relativelymore plentiful in a given region, then this implies thatthe relative price of labor (wages) is lower, which fur-ther implies that the region will have a comparativeadvantage in the production of labor-intensive goods,

because the productionof labor-intensivegoods is rela-tivelycheaper for that region. If regions specialize in theproductionofgoods forwhichrelativefactors areabun-dant and export those goods, importing goods forwhich factors arescarce,both regions gain fromspecial-ization and trade.

Samuelson (1953, 1949, 1948) elaborates on theHeckscher-Ohlin result to demonstrate how free trade

and/or factor mobility equalizes the relative and abso-lute long-run prices of factors of production amongregions involvedin trade.Assumethat region 1 special-izes in the production of A, the labor-intensive good,whereas region 2 specializes in the production of B, thecapital-intensive good. Once trade opens between thetwo nations and specialized production begins, the rel-ative price of labor in the labor-abundant region risesdue to relative increases in the demand for labor. Con-versely, the relative price of capital rises in the capital-abundant region due to relative increases in thedemand for capital. Even if capital and labor are immo-

bile, the aggregate effect of these market forces is toequalize relative factor prices across regions. With fac-tor mobility, less trade is required to equalize relativefactor prices. Furthermore, with our assumptions of perfect competition, homogeneous production technol-ogies,andconstant returns to scale, trade also equalizesthe absolute prices of labor and capital. In other words,real wages and real interest rates for similar types of labor and capital will be the same in both regions fol-lowing trade and specialization (Salvatore 1998).

The HOS theorem is complementary to DavidRicardo’s theory of comparative advantage (1817) inthat the Heckscher-Ohlin model explains why compar-ative advantages exist (differences in initial factorendowments), whereas Ricardo’s theory only estab-lishes why comparative advantages may lead to spe-cialized production.TheHOStheorem alsohas obviousimplications for regional trade and development. In itssimplest form, themodelsuggests that specialization infactor-abundant production combined with free inter-regional trade will result in equal per capita incomesacross regions for workers with similar skills. This




hypothesis is a comparative statics version of the inter-regional convergence hypothesis.

Dynamic versions of the convergence hypothesisdraw on neoclassical growth theory, particularly themodels proposed by Solow (1956) and Swan (1956). Inneoclassicalgrowth theory, there aretwodifferent typesof convergence. Conditional convergence refers to theconvergence toward a steady state growth rate result-ing in constant percapita incomes, consumption levels,and capital/labor ratios. This is termed conditional,

because savings rates, depreciation rates, and popula-tion growth rates are allowed to differ across countries.Therefore, conditional convergence need not necessar-ily result in equal per capita income levels across coun -tries. Absolute convergence occurs when growth modelparameters are equal for all countries, which in turnimplies that richer countries will grow slower thanpoorer countries, and per capita incomes will becomeequalized across countries over time as in the HOSmodel of international trade.

There are several reasons why it is important to dis-tinguish between the convergence hypothesis of theHOSmodel and theconvergence hypotheses from neo-classical growth theories. First, neoclassical growthmodels are, by definition, dynamic models, so theirconvergence hypotheses refer to the convergence ingrowthrates rather than thestaticconvergence of factorprices. Although both models predict the eventuallong-run convergence of per capita incomes acrossregions, the process that brings about convergence dif-fers between theneoclassical trade and growthmodels.Since most neoclassical growth models typicallyassume away trade by modeling growth within closedeconomies, convergence occurs not through trade orfactor mobility but through diminishing returns to cap-ital investment. In neoclassical growth theory, regionswith less capital per unit of labor will tend to havehigher rates of return and higher initial growth ratesthan regions with high levelsof capital perworker (Barroand Sala-i-Martin 1999). Althougha regional version of the neoclassical exogenous growth model proposed byBorts and Stein (1964) considers interregional factormobility, most neoclassical growth models assume per-fect intraregional factormobility butassumezero inter-regional factor mobility. Finally, neoclassical growthmodels often allow for differences in production tech-nologies and/or savings rates across regions. If theseparameters are assumed to be exogenous, then regionswill only conditionally converge toward a steady stateconstant rate of growth. In neoclassical growth modelsthat allow for variability in growth parameters, thesteady state may differ across regions, but all regionseventually reach constant per capita income, consump-tion, and capital/labor ratio values.

The possibility of dynamic or static interregionalconvergence has obvious implications for regionaldevelopment theory: tradeand investmentwilleventu-ally lead to an equalization of wages across regions. It isimportant to note, however, that this does notnecessar -ily imply equalization of per capita incomes, since percapitaincomesdependon additional factors such as theskill level of the population and the percentage of thepopulation that is in the labor force. Thus, although theHOSmodel implies convergence in wages across coun-tries, it does not necessarily imply convergence in percapita incomes, a point that is often ignored by critics of neoclassical trade theories. Also, since growth parame-ters may differ across countries, we may only observethe weaker form of conditional convergence over time,and per capita incomes may differ due to differencesacross regions in production technologies or savingsrates.

2. LOCATION THEORY AND REGIONAL SCIENCE

Most current theories of regional economic develop-ment can be viewed largely in terms of their criticismsand response to the convergence hypothesis and neo-classical economics more generally. Location theorywas developed as an early response to the ignorance of space in traditional economic analyses. Originallydeveloped by Alfred Weber (1929) and later extended

by Edgar Hoover (1937), Melvin Greenhut (1956), andWalterIsard(1956), locationtheory has focused primar-ily on developing formal mathematical models of theoptimal location of industry given the costs of trans-porting raw materials and final products. Simplystated, firms will tend to locate near markets when themonetary weight (defined as the shipping costs permile times the physical weight of the item shipped) of the final product exceeds the monetary weight of theinputs required to produce that product. Conversely,firms will tend to locate near primary input sourceswhen themonetary weight of rawmaterials is large rel-ative to the weight of the final product. Firms may alsoweigh the relative production cost savings from partic-ular locationswith theincreased transportation costs tominimize the to ta l cos ts of product ion andtransportation.

Although location theory alone does not provide atheory of regional economic development, the explicitmodels of transportation costs have been highly influ-entialin later theoriesofeconomicgrowthand develop-ment,particularly theneweconomicgeography. WalterIsard (1956) eventually drewon concepts from locationtheory to develop the field now known as regional sci-ence, a branch of the social sciences that examines theimpactof space oneconomic decision making. Theana -lytic methodologies developed by Isard (1960) and




extended by Isard et al. (1998) have become standarditems in the regional planning professional’s toolbox.

3. EXTERNAL ECONOMIES

One problemwith traditional Weberian location the-ory is that the cost advantages of spatial proximity toinputs and markets are modeled purely in terms of internal transportation cost economies. As economistssince Marshall ([1890] 1961) have pointed out, indus-tries maycluster together forreasons unrelated to inter-nal cost considerations. Instead, firms may cluster totake advantage of external economies that result fromclose proximity to a large number of other firms. Fol-lowing Hoover (1937), these external economies mayinclude (1) localization economies that result from thefirms in the same industry colocating in the same areaand (2) urbanization economies, which result from thecolocation of firms in different industries. Since theseexternal benefits tend to increase with the number andoutput of colocating firms, they are usually referred to

as external scale economies or agglomeration economies.Economists continue to disagree over the nature andcause of these external economies, but broadly speak-ing, knowledge spillovers, labor pooling, and econo-mies in the production of intermediate inputs have all

been cited as contributing factors. Because externalscale economies are characterized by both positiveexternality effects and increasing returns to scale, tradi-tional competitive market models have tended toignore these effects.

4. MODELS OF SPATIAL COMPETITION

Another benefit of spatial proximity from a firm’sperspective is the ability to charge higher prices to cus-tomers that are located within close proximity of agiven distribution point. This observation, firstexplored by Harold Hotelling (1929), has produced aconsiderable literature on the role of space as it affectsthepricing behaviorof firms.TheessenceofHotelling’sargument is that spatial proximity gives firms marketpower, because nearby customers would be willing topay more for goods that can be consumed withoutincurring substantial transportation costs. In the sim-plest case with two firms competing along a straightline, monopolistic competition in space produces a ten-dency toward concentration with firms splitting themarket along the line segment. This optimum locationis not socially efficient, however, since customers ateither end of the line must incur higher transportationcosts. Works by Devletoglou (1965), Eaton and Lipsey(1978), and many others extend Hotelling’s originalmodel to incorporate the threatof entry by competitors,demand elasticity, and competition along a plane.Theseextendedmodels demonstrate thatconcentration

is not always the equilibrium outcome and that thethreat of entry may or may not always drive profits tozero.

5. CENTRAL PLACE THEORY

An early attempt to bring some of these perspectivestogether in a more general theoryof the spatial locationof firms can be found in the work of Christaller (1933)and Losch (1954). Christaller first formulated central

place theory, as it came tobecalled, todescribe the distribution of cities of different sizes within southern Ger-many. Losch expands on the initial ideas of Christallerand places them into an economic context, introducingtheideaofa demand coneinto thehexagonalmarketareaframework developed by Christaller. The basic ideaelaborated by Losch is that the relative size of a firm’smarket area, defined as the territory over which it sellsits product, is determined by thecombined influenceof scale economies and transportation costs to markets. If scale economies are strong relative to transportation

costs, all production will take place in a single plant. If transportation costs are large relative to scale econo-mies, firms will be scattered around the region. For anygiven market, free entry among firms drives profits tozero and causes all spaces to be occupied by equallyspaced firms with hexagonal market areas. However,due to differences in transportation costs, scale econo-mies, and demand fordifferentproducts, thesize of theindividual hexagons will be different for different mar-kets. Central places emerge in locations where marketareas fordifferentproducts overlap. As indicated in theprevious section, this process of monopolistic competi-tion in space produces a hierarchically structured sys-tem of cities of different sizes and different levels of product diversity.

Although location theory and central place theoryhave each contributed considerably to ourunderstand-ing of the spatial pattern of firms, their static perspec-tive and ignorance of many important dimensions of regional economic growth, particularly labor migra-tion, has impaired their use as a general theory of regional economic development. Theories of regionaleconomic development incorporate theseconcepts intomoreformalexpressions of regionalgrowth dynamics.

C. Alternative Theories of Regional Economic Development

According to the interregional convergence hypoth-esis, interregional trade and regional investmentshould eventually lead to the equalization of wagesacross regions and the equalization of per capitaincomes across regions with equal labor participationrates, skill levels, and investment levels. The first twosets of theories examined in this section can be definedin terms of their stance on the interregional conver-




gencehypothesis discussedabove. Following thesetwotheoretical perspectives areseveral alternative perspec-tives that view regionalgrowthanddecline as resultingfrom underlying structural changes in theorganizationof industry and thepolitical-economic system. Thefinalsection examines twonewperspectives from neoclassi-cal economics that incorporate many earlier criticisms intonew theoretical approaches. The final subsection exam-ines the common themes among all of these theories.

1. THEORIES OF REGIONALECONOMIC CONVERGENCE

a) Export Base TheoryAmong all theories discussed in this review, few

have been as influential as theexport base model devel -oped in the1950s by Charles Tiebout (1956a, 1956b)andDouglass North (1956, 1955). North (1955) argues thatregional growth in local political, economic, and socialinstitutions is largely determined by the region’sresponse to exogenous world demand. This responseproduces growth in both the economic base, or export

sector, and the “residentiary,” or nonbasic, sector,which exists only toserve thebasic sector. Furthermore,North points out that regions need not necessarilyindustrialize to grow, since a region’s exports may con-sistof either manufactured goods, service-basedgoods,or agricultural goods.

As regions grow, their economy becomes morediversified,dueto increases in localproduction toserveincreasing local per capita incomes and the emergenceof new industries serving export markets. Over time,regions will tend to “lose their identity as regions”(North 1955, 258). With the increasing diversity of regionalexportbases and themobility of factors of pro-duction,production will tendto disperse across regionsover time, and per capita incomes will tend towardinterregional convergenceas in theHOS modelof inter-national trade.

In a debate between Douglass North and CharlesTiebout in the Journal of Political Economy, the modernversion of thetheory came into fruition.Tiebout (1956a)argues that North’s model ignores the importance of many important supply-side factors that ultimatelyaffect a region’s ability to support an emerging export

base. He also criticizes North’s article (1955) by point-ing to other instances when exports are not the soledeterminants of regional economic growth. For exam-ple, in regions with populations large enough to affectthe worldwide demand for exports, regional growth inper capita incomes may be affected by an increase inexport demand and may affect world demand forexports. This bidirectional causality implies that thereare significant feedback effects between regional percapita income growth and export market demand.North (1956) replies to Tiebout’s criticisms by pointing

out that the model should be viewed as a long-runmodel of economic growth that may not always beapplicable in the short run when certain factors of pro-duction are fixed and immobile. In the long run, how-ever, the model still holds as an adequate account of regional economic growth. In a final rejoinder (1956b),Tiebout reiterates that theexportbase concept is merelyan oversimplified version of more sophisticated gen-eral equilibrium national per capita income models.Furthermore, the “stages” theory of economic growthcriticized by North is not necessarily wrong, accordingto Tiebout. Instead, it is only applicable for a more lim-ited number of cases.

b) Neoclassical Exogenous Growth TheoryThe mainstream neoclassical economic view of

regional economic growth draws heavily on the litera-ture of national economic growth developed by Roy F.Harrod (1939) and Evsey D. Domar (1946). In contrastto the demand-side approach of export base theory,neoclassical growth theory models regional growthusing supply-side models of investment in regionalproductive capacity. Early versions of this theory areoften referred to as exogenous growth theory, becausesavings rates, population growth rates,and technologi-cal progress parameters are all determined outside themodel. The models developed by Solow (1956) andSwan (1956) have been the most influential in moderngrowth theory, primarily due to the more general formof the regional production function, which allows forsubstitutability among production inputs in accor-dance with production functions that assume constantreturns to scale and a positive elasticity of substitution

among inputs (Barro and Sala-i-Martin 1999). Thesefeatures generate predictions of conditional convergenceofgrowthratesover time acrosscountriesand thelevel-ingoff ofpercapita incomes withincountries. If growthparameter values are the same across countries, thenneoclassical exogenous growth theory also predictsabsolute convergence in per capita incomes, as dis-cussed in the previous section.

Borts and Stein (1964) modify the neoclassicalgrowth model for the regional context by allowing foropen regional economieswith net exogenous labor andcapital inflows. Barro and Sala-i-Martin (1999) arguethat interregionalconvergence is morelikely thaninter -nationalconvergence,because factors of production aremore highly mobile across regions. Furthermore, abso-lute convergence in per capita incomes across regionswithin a country is more likely due to the homogeneityof savings rates, depreciation rates, population growthrates, and production functions within countries.

Williamson (1965) modifies the Borts and Stein(1964) argument somewhat by suggesting several rea-




sonswhy interregionalconvergencemay bemorelikelyduring the later stages of a nation’s development. First,labor migration rates in relatively underdevelopednations are unequal due to differences in the costs of migration and differences in the way migrant workersare perceived vis-à-vis indigenous workers. Second,initial endowments or constraints, external economiesof scale, and immature capital markets in some regionsmay impede equal capital flows across regions. Third,central government policies may be biased towardregions that are more politically mobilized or whereeconomic growthcreates theneed foradditional capitalinvestments. Finally, there may be few interregionallinkages in the early stages of national growth.

2. THEORIES OF REGIONALECONOMIC DIVERGENCE

The concept of convergence, even in its weaker for-mulation as long-run constant per capita incomegrowth rates, or conditional convergence, has comeunder attack from many sides. One criticism is largely

empirical. The field of development economicsemerged in thepost–World War II periodin recognitionof the growing economic disparities between industri-alized nations and less developed countries (LDCs).Althoughempiricalstudies (Perloffet al. 1960;William-son 1965) supported a trend toward economic conver-gence at the regional scale, at least in the United States,critics pointed to thepersistentpoverty inmost LDCs asevidence that some regions of the world were not con-forming to the predictions of the neoclassical growthmodels.

Another criticism focuses on theunrealistic assump-tions underlying neoclassical growth theories, particu-larly those having to do with the assumption of con-stant returns to scale, zero transportation costs,identical production technologies across regions, per-fectly competitive markets, identical preferences acrossregions,and theassumption ofhomogeneous labor andcapital inputs. Although there have been attempts toincorporate more realistic assumptions into extantmodels of exogenous growth, most neoclassical theo-ries still tend togenerate predictionsofconditionalcon-vergence even when labor or capital is heterogeneousacross space (Barro and Sala-i-Martin 1999).

Oneresponseto theconvergence critique has been to

directly incorporate a prediction of divergence intoextant theories of regional economic growth. Here twosuch theories are examined: cumulative causation the-ory and growth pole theory.

a) Cumulative Causation TheoryGunnar Myrdal (1957) argues that increasing returns

to scale producesclustering of economic activity withinthose regions that are first to industrialize. Moreover,

the process of growth tends to feed on itself through aprocess of cumulative causation. Although underdevel-oped regions offer the advantage of low-wage labor,these benefits tend to be offset by the agglomerationeconomies found in the industrialized regions.

Myrdal (1957) argues that underdeveloped regionsmay benefit from growth in developed regions through

“spread” effects resulting from the diffusion of innova-tions into a “lagging” region and the growing exportmarkets for lagging region products. However, these

benefits will tend to be offset by the “backwash” effectsresulting from the flow of capital and labor from thelagging region into the developed region. Free traderesults among regions only serve to reinforce this pro-cess of cumulative causation by further catalyzinggrowth in developed regions at the expense of laggingregions.

Kaldor (1970) elaborates on and expands Myrdal’stheory of cumulative causation by introducing ideasfrom export base theory and the concept of an efficiencywage. Like Myrdal’s model, Kaldor assumes thatincreasing returns to scale give early industrializingregions the advantage in international trade. Cumula-tive causation sets in when an exogenous shockincreases the worldwide demand for an industrialgood. Actual monetary wages may be the same in allregions, but efficiency wages, defined as monetarywages divided by a measure of labor productivity, tendto be lower in industrialized regions dueto scale econo-mies. Since regions with lower efficiency wages canproduce more output, which in turn leads to furtherreductions in the efficiency wage (and so on), growthmay build on itself without bound.

While the Myrdal-Kaldor cumulative causationapproachis usually taken to implyan outcome ofdiver-gence, Dixon and Thirlwall (1975) formalize Myrdal’smodeland demonstratethat cumulative causationdoesnot necessarily predict interregional divergence givenreasonable modelparametervalues. Instead, the modelmore likely predicts “constant regional growth differ-ences sustained by the Verdoorn effect” (Dixon andThirlwall 1975, 203). The Verdoorn effect refers to thefact that growth in labor productivity is partly depend-ent on the growth of output. Dixon and Thirlwall dem-onstrate that this effect, which is central to the cumula-

tive causationtheory, canbe a source of regionalgrowthratedifferencesonlywhentheVerdoorncoefficient var-ies between regions or when there are differences inother model parameters that are also affected by theVerdoorn coefficient.

b) Growth Pole TheoryThegrowth pole theoryof regional economicgrowth

places Myrdal’s theory of cumulative causation into a




spatial context. Perroux’s (1950) “space as force” viewof spatial interaction, which defines space as a type of network that is held together by centripetal forces, hasformed the basis of most growth pole theories.Although this view of space is not unlike that which isadvocated by those in the flexible specialization/net-work theory tradition, the two theoretical perspectiveshave largely developed in isolation from one another.

In Perroux’s (1950) original formulation, a growthpole referred to linkages between firms and industries.“Propulsive firms” are those that are large relative toother firms and generate induced growth throughinterindustry linkages as the industry expands its out-put. Hirschman (1958) argues similarly in his discus-sion of backward and forward linkages between firms.Boudeville (1966) is credited for placing Perroux’s for-mulation into geographic space. For Boudeville, agrowth pole is defined in terms of the presence of pro-pulsive firms and industries that generate sustainedregional growth through linkages with other firms in a

region.Hirschman (1958) discusses how polarized develop-ment may benefit both the growing region and the sur-rounding hinterland. Like Myrdal’s “spread” and“backwash” effects, Hirschman argues that growth in adeveloped regionproducesfavorable“trickling-down”effects within a lagging region as the lagging region’sgoods are purchased and labor hired by the developedregion. Growth may also produce unfavorable “polar-ization” effects resulting from competition and trade

barriers erected by the developed region. Despite thesesimilarities, Hirschman rejects Myrdal’s cumulativecausationapproach as overlybleakdueto thefact that ithides “the emergence of strong forces making for aturning point oncethemovement towardsNorth-Southpolarization within a country has proceeded for sometime”(p.187,n.5a). In theend,Hirschmanhas faith thattrickle-down effects will outweigh polarization effectsdue to increased pressure to enact economic policies tocombat the latter.

A related perspective is Friedmann’s (1966) center-periphery model, which includes elements of Myrdal’stheory of unbalanced regional growth and export basetheory. Like export base theory, Friedmann recognizesthat growth may be externally induced. He also pointsto the impact of interregional labor migration on theconvergence of incomes across regions. However,Friedmann departs from traditional export-based theo-ries of economicgrowthby pointing outthat localpolit-ical and economic entrepreneurship and leadershipmay affect the translation of export demand intogrowth in the nonbasic residentiary sector. The qualityof local leadership is in turn affected by the region’sdevelopment history. Friedmann also points out that

regions may vary in the extent to which supply con-straints limit a region’s ability to respond to increaseddemand for exports. Finally, largeurban areas have theinitial advantage in the competition for new growth

because of the decreasing cost benefits of urbanizationeconomies. All these factors tend to work to the advan-tage of core regions, which are incumbents in the eco-nomic development game. Outside of the core, regionsare differentiated by their relative degree of regionaleconomic autonomy. “Resource frontiers” are undevel-oped regions whose primary draw is the plentiful sup-ply of untapped natural resources. “Downward-transi-tional areas” are rural areas trapped in a stage of structural poverty, primarily due to their structuraldependence on adjacent core regions.

Growth pole theory was largely abandoned in the1980s dueto growing dissatisfaction with theperceivedlackof coherence betweentraditional notionsof growthpoles and empirical reality. Many growth pole policieswere shown to fail in their intended objectives of induc-

ing new economic growth in lagging regions. Othercriticisms also emerged, such as the inappropriate useof input-output analyses to examine thespatial interac-tions between firms, the difficulties of translatingPerroux’s original abstract formulation into useful the-ories of regional economic development, the lack of emphasis on the process of structural change withingrowth poles over time, the weak behavioral basis of thetheory, andthelack ofexplanationwithinthe theoryabout why some growth poles tend to grow faster thanothers (Darwent 1969; Higgins 1983; Thomas 1972;Hermansen 1972).

3. STRUCTURALIST THEORIES

Another body of theoryexamines regional economicdevelopment as a process of structural adjustment bothwithin and outside the region. Rather than viewregional economic growth in terms of the factors push-ing regional economies toward or away from someequilibrium rate or distribution of growth, these theo-rists view economic growth as a path-dependentevolu-tion through various stages of economic maturity.

a) Stage/Sector TheoriesEarly perspectives in the structuralist tradition

include several different “stage” theories of regionaleconomic growth. Since many of these theories alsoinclude a focus on sectoral change, some are alsoreferred toas “sector” theories (Perloff et al.1960). Hoo-verand Fisher (1949) present an early theoryof sectoralchange through various stages of regional growth. Inthe early stages of regional growth, agricultural pro-duction predominates and the economy is largely self-sufficient.As transportationimproves, producers begin




to specialize and engage in outside trade with otherregions. As diminishing returns begin to occur in theproduction of the region’s primary extractive and agri-cultural industries, the region enters a phase of indus-trialization. At themost advanced stage,the region spe-cializes in export production. In this theory, theprogression from self-sufficiency to export producer islargely seen in terms of the internal changes in the divi-sion of labor that produce economic specialization.

Other early stage theories developed to explainnational economic growth have also been used toexplain regional economic growth and development.Schumpeter (1934), like Hoover and Fisher, sees eco-nomic development as occurring from within theregion. Regional economic change can be viewed as aprogression through long waves of growth and declinethat are distinguished from one another through thedifferences in the nature of the innovations that charac-terize each period. New innovations emerge through aprocess of “creative destruction,” where old ideas are

constantly replaced by new ones. Rostow (1977, 1956)providesa related view inhisdescriptionofa “take-off”period, where a rapid revolution in the means of pro-duction leads to a relatively long-term wave of sus-tained growth.

Thompson (1968) presents another stage theory of urban/regional economic growth. According toThompson, urban areas grow by progressing from anearly stage where the local economy is largely equatedwith a single large industry or firm through variousphases of export-led growth until the export of services

becomes the major function in the final stage. At somepointduring this development process,a “ratchet” effectoccurs, where growth patterns become locked intoplace and future contraction becomes unlikely. Thomp-son gives several possible explanations for this effect:

1. In diverse urban economies, small firms have mul-tiple local linkages that are difficult to reproduce if the firms relocated to another region.

2. Cities with larger populations are more successfulin garnishing political spoils from state andnational government entities.

3. Per capita public service costs are significantlylower due to economies of scale.

4. A large local population base is valuable as a labor

resource and a potential consumer market forlocally oriented industries.5. Large areas give birth to more local industries than

small areas, which in turn increases the probabilityof local innovations.

Thompson concludes by pointing out that disecono-mies of scale associated with congestion and bureau-cratic costs may set in to counter the ratchet effect.

Pred (1977) discusses how the structure of informa-tion flows between economic agents affects the eco-nomic development of city systems. A central premiseof the work is that “spatial biases” in the flow of infor-mationtend to give incumbenturban centers an advan-tage in economic growth. Furthermore, the flow of information across the landscape occurs primarilyamong the system of large metropolitan centers, thusreinforcing the stability of the system of cities. Predrelies on this basic idea to account for the historicald ev el op me nt o f u rb an a re as . D ur in g t he“pretelegraphic” period of urbanization, when urbancenters emerged primarily to facilitate trade, thespatial

bias was most pronounced due to the importance of face-to-face communication within cities and amonglarge trading centers. Dueto spatial biases, trading cen-tersestablished in thepretelegraphic centers weremorelikely to become the sites of initial industrialization.Once established, multiplier effects gave these initialindustrial centers a cumulative advantage in economic

growth as innovations in production technologies dif-fused among local factory owners. During thepostindustrial period, “multilocational” corporationsemerged to transform cities. Unlike growth pole theo-r is t s, P re d c on c lu d es t ha t t he i nt er - a n dintraorganizational linkages between the administra-tive hubs found in large metropolitan areas are self-reinforcing and not likely to result in a “spread” of growth into lower-level urban centers or surroundinghinterlands (p. 122).

Henderson (1974) provides an interesting look athow changes in industry structure lead to different citysize distributions. Essentially, Henderson argues thatthe relationship between the utility of any given cityresidentand city size can be represented by an invertedU, which captures external economies of scale on theleft side anddiseconomiesof scale on theright.Thelink

between this argument and industry structure is thetwist that whereas diseconomies are predominantlyassociatedwithpopulation size,externaleconomies areindustry specific. Thus, it only makes sense to groupfirms that share thesame external economies within thesame city. This suggests that the optimal size of anygiven city over time will depend on its role, which is afunction of the industry structure that dominates the

city. b) Profit/Product Cycle TheoriesVernon’s (1966) product cycle approach views

regionaldevelopment andchangein termsof theevolu-tion of regional industry structures required to sellexport goods. Due to lowprice elasticity of demand fornewproducts, an innovating firm cares less about smallinitial cost differences between regions than about




future cost considerations. Furthermore, in the earlystagesofa product’s life, locational proximity tosuppli-ersandresearchanddevelopment firms is important tofacilitate the flexible incorporation of product changesand process innovations. Thus, large urban areas will

be preferred locations for firms producing new imma-ture products. As the product matures and becomesmore standardized, the need for flexibility diminishes,and the need to focus on economies of scale increases.Once production has been standardized, the firm canemploy cheap low-skilled labor, so underdevelopedregions become preferred locations. Weinstein et al.(1985) rely on this perspective to explain patterns of regional development in the United States.

Taylor (1986) provides several criticisms of thisapproach:

1. Themodel provides an ambiguous treatment of theinternationalization of production and the owner-ship dimensions of internationalization.

2. The model is at odds with more conventional incre-mentalviews ofproductinventionandinnovation.3. The model ignores product differentiation.4. Theassumption of shifts to low-cost labor locations

in the final stage of the product cycle implicitlyassumes that cheaplabor is theprimary cost consid-eration, an assumption that is not always true.

5. The model assumes a homogeneous geographicplane on which firms compete.

6. Market cycles may not always be consistent withinternational product cycles.

Markusen’s (1985) profit cycle theory is one modifica-tion of theproduct cycle approach that responds to sev-eral of Taylor’s (1986) criticisms by incorporating afocus on industry structure at various stages of a prod-uct’s history. According to Markusen, sectoral changewithinregionscorrespondstooneof five “profit cycles”that are determined by the structure of competition atvarious stages of product development. Initially, sec-toral development precedes from a periodof zero profittoward a period of superprofits, where initial innova-tors earn monopolyprofits.Thesector then entersa nor-mal profit stage as new firms enter the market. Even-tually, the market becomes saturated, and destabilizingfactors set in. During this phase, firms either tend

toward oligopolistic formsof organization to gainaddi-tionalprofitsor thefirmsentera stageofdecline,as sub-stitute or imported products take over the market. Thefinal “negative profit” stage is one of sectoral declineand disinvestment.

Each stage in Markusen’s (1985) profit cycle is char-acterized by unique spatial relationships. In the initialstages of a product’s life, the location of firms is largely

determined by historical accident or by the physicallocation of the innovation. Entrants into the marketmaybe drawn to thelocation of theinitial innovationorto regions whose resources are favorable to the indus-try. During the “superprofit” stage, industries colocateto benefit from knowledge spillovers and a localizedskilled labor force. Eventually, firms grow in size,diminish in number, and become increasingly orientedtoward the location of consumer markets. If the indus-try tends toward an oligopolistic structure, firms willtend to concentrate to take advantage of market powerresulting from proximity to consumer markets andlocation-oriented political supports. During later peri-ods, oligopolies seeking to minimize labor costs mayrelocate to escape unionization. If firms enter a finalstage of decline, the spatial tendency will be one of divestiture and gradual abandonment of location-specific facilities.

c) Industrial Restructuring Theories

Several new empirical realities began to emerge inthe late 1970s and early 1980s that led to the emergenceof new structural explanations of regional growth anddevelopment. Among these trends have been thedecline of manufacturing and the emergence of theser-vice sector in the industrialized world, the increasinginternational mobility of capital and labor flows, andthe growing interregional disparities in labor condi-tions across gender and ethnic lines. These and otherstudies in theliterature suggest that fundamental shiftsin the organization of industry and labor have resultedina “deskilling”of thelaborforce(Harrison 1985),a rel-ative decline in theproportion of workers earning mid-

dle-income wages (Leigh 1994), and a spatial stratifica-tion of the workforce (Massey 1984).One response among regional development theo-

rists wasto look forexplanations forthesetrendswithinthe changes that were occurring in industrial organiza-tion. The “industrial restructuring” perspective exam-ines how structural changes in the organization of industry have affected regional capital and labormarkets.

Several studies in this tradition point to the interna-tionalization and mobility of capitalist production andits effect on workers. According to Sassen (1988), direct

foreign investment has disrupted traditional laborstructures. In the developing world, frequent layoffsresulting from insecure manufacturing jobs have cre-ated a large supplyof female migrant workers, many of whom were previously employed in the nonwagehousehold sector. In the United States, the internation-alization of capital flows resulted in the disinvestmentin many U.S. industries. This disinvestment in national




productive capacity has in turn resulted in the destruc-tion of socialand communityties inmany regions of theUnited States (Bluestone and Harrison 1982).

Massey and Meegan (1982) examine of the geogra-phyof employmentdecline andhowfirmsusejob elim-ination as a corporate strategy. The authors begin byexamining three different corporate strategies that

typically lead to job loss. Intensification strategies seek toimprove labor productivity without substantial newinvest-ments. Investment and technological change strategiesresult in changes to productive technology. Rationaliza-tion strategiesare those focused on thesimple reductionof labor capacity. Sinceeach of thesestrategiesmay leadto differences in the number of plant closures andinvestments in new capacity, the authors argue thatregions areaffected in differentways depending on thenature of the strategy leading to employment decline.

Another trend has been the transformation from amanufacturing-based to a service-based economyamong advanced industrialized nations. Noyelle andStanback (1983) attribute the rise of theservice sector tothe increased geographic size of markets, innovationsin transportation technology, the increased importanceof public and nonprofit sectors, and the rise of the mul-tinational corporation (p. 3). Their empirical studyfocuses on the structural changes resulting from theseforces acting on U.S. metropolitan areas. Regardingregionaldevelopment, theauthors argue that the trans-formation to a service-based economy has fosteredincreased centralization among corporate activitiesaccompanied by the decentralization of many low-skilled white-collar jobs. Theauthors also pointout thatmany older regions within theSnowbelt have managedto stave off decline following the loss of manufacturing

jobs with concomitant growth in corporate activitiesand government-sector jobs.

Storper and Walker (1984) explore the importanceof labor to the location decisions of industries. Labor,unlike other factors of production, is inherently hetero-geneous across space due to differences in culture,social institutions, and production requirements acrossthat same space. Furthermore, unlike other commodi-ties, labor is not purchased outright. Instead, it is

boughtand sold subject to uncertainexpectationsaboutfuture performance and reproducibility. Firms respond

toandtake advantageof thespatial heterogeneityof thelabor force as a way to exert control over their workers.For example, firms can easily escape unionization byrelocating to another region.Similarly, firmscan exploitthe spatial relationships between workers within indi-vidual plants to reduce the tendency toward workersolidarity. Workers, on the other hand, may also takeadvantage of the mutual dependency between the firm

and the worker and successfully capture concessions if their skills are sufficiently scarce outside the region.

Danson (1982) argues that the emergence of a“dualist” industrial structure has been a primary causeof the stratification and segmentation of the labor mar-ket. The author begins by discussing the emergence of the recent period of “monopoly capitalism,” where

large core firms embedded in oligopolies have come todominate smaller competitively structured peripheryfirms. The labor market is in turn differentiated basedon skill level and is largely confined to distinct seg-ments based on internal linkages to specific firms, tradegroups, or industries. Jobs within different skill strataor industry segments often are also highly differenti-ated in terms of worker benefits and wages. Theremainder of thearticlediscusseshowthe emergence of peripheral firms in many inner cities and regions hasled to the relative decline of those locations relative tothe locations housing core firms.

d) Flexible Specialization and Network TheoryAnother theoretical response to these recent changesin thestructure of industry hasbeen thedevelopment of a new theoretical approach that focuses on the patternsof interrelationships found in new industrial districts.Piore and Sabel (1984) discuss how increasing socialunrest, floating exchange rates, oil shocks, the interna-tional debt crisis, the saturation of industrial markets,and thediversificationof consumer demands have pro-duced a new form of production designed to perma-nently respond tochangethroughinnovation. Thisnew“flexible specialization” is based on the use of flexiblelabor and capital that can easily be tailored to the needsof changing markets. Firms engaged in flexible special-ization are bound together through highly localizednetworks where knowledge and information areshared. These networks are bound by trust rather thanhierarchical authority relationships found in verticallyintegrated forms of organization. Piore and Sabel pointto the Marshallian industrial districts of Italy as oneexample of flexible specialization in action.

Saxenian (1994) attributes Silicon Valley’s success inthehigh-tech industry to itsadoptionofa network formof industrial structure. She observes that althoughRoute 128 in Bostonand Silicon Valley, California, were

both high-tech centers in electronics during the 1970s,onlySiliconValley emergedfroma regionalrecessioninthe 1980s to becomean international leader in the high-tech industry. Her work examines the causes of thesedivergent growth trajectories and concludes that thedifferences have been primarily attributable to differ-ences in the nature of industry structure within the tworegions. Silicon Valley’s industry was defined by dense




social networks based on flexible specialization andentrepreneurship. In contrast, Route 128 was domi-nated by a small number of hierarchically integratedfirms that valued secrecy and independence.

Porter (1990) discusses how geographic clusteringcanbe viewedas an organizing force for national indus-trial competitiveness. Domestic rivalry combined with

discriminating local demand helps to prepare firms forglobal markets. Geographic concentration magnifiesthe impact of domestic rivalry, and localdiscriminatingdemandservesas a catalyst for innovation. Geographicconcentration also helps tospur local investment inspe-cialized infrastructure and other local factors, espe-cially by governmental and educational institutionsthat depend on the health of a local industrial cluster.Finally, geographic clusters facilitate intralocal infor-mation flows and help to spread ideas and innovationsespecially when firms share similar local business cul-tures, interact in local businessorganizations,and sharesimilar local or national norms and values.

In chapter 10 of his book, Porter (1990) expands onhis theory to define different stages of competitivedevelopment. In the factor-driven stage, internation-ally successful industries draw advantages from basicproduction factors. Eventually, nations may enter aninvestment-driven stage, where firms and the nationalgovernment invest locally to transform local basic fac-tors into more advanced factors of production, eventu-ally reaching the innovation-driven stage of nationaldevelopment,whenall determinants of competitionareworking at their strongest. The final wealth-drivenstage is the beginning ofa periodofdecline,causedbyareduction in thenumberof successful rivalsanda trendtoward capital preservation rather than capital accu-mulation (p. 557).

What features of these new industrial districts andnetworks contribute to the superior performance of these industry structures in adapting to change?According to Scott (1992) and Cooke and Morgan(1993), networks offer the control advantages of hierar-chical forms of transaction governance while maintain-ing the flexibility advantagesofmarkets. Networksrelyon locational proximity to reinforce trust relationships

between those involved in economicexchange. The keyfeatures of a networked region are strong public and

private industrial support institutions, channels for therapiddiffusionof technology, a highdegree of interfirminteractions, and a critical mass of innovation-focusedfirms (Cooke and Morgan 1993, 562).

One criticism of the network-flexible specializationschool is that theorists in this tradition tend to oversim-plify network relationships and ignore fundamentalstructural relationships within and outside regional

networks. Many also fail to acknowledge differencesacross networks in thestructureof competitive relation-ships among firms. For example, Porter places muchmore emphasis on the importance of local competitionamong similar firms in the same industry. Others in thenetwork tradition place less emphasis on localcompeti-tion and focus instead on the collective sharing of knowledge and information among local firms.

Markusen et al. (1999) add additional complexityinto the common conception of the flexibly specializedindustrial district by emphasizing the role of largefirms, state actors, local fixed capital, and the activerecruitment of skilled labor in district formation. Theauthors also point to the importance of both local andglobal “embeddedness” within key intraregional andinterregional economic and political relationships. Intheir analysis of fifteen “second-tier” cities, the authorsidentify four distinct types: (1) the traditionalMarshallian industrial district based on small-firmcraft-based production; (2) the hub-and-spoke struc-turewheresuppliersarecoagglomeratedaround oneora few core firms; (3) state-anchored districts, where agovernmentalor nonprofit entity predominates;and (4)satellite industrial platforms, where branch facilities of large, externally owned firms locate.

e) Marxist TheoryAnother response to the new structural changes in

the international economy, especially the persistentunderdevelopment of regions in the third world, wasthe emergence of a Marxist perspective on regionalgrowth and decline. Marxists theories of unevengrowth and spatial differentiation place the roots of theuneven development crisis squarely within the natureof the capitalist system. In contrast to theories in theconvergence-divergence debate, authors in this litera-ture argue that neither perspective is correct. In fact, asMartinandSunley(1998)observe in their review of thisliterature, the Marxist perspective regards regionalgrowth and declineas neither convergent nordivergent

but “episodic.” In other words, capitalist accumulationproceeds through lumpy progressions, spurred for-ward by specific crises, which in turn force capitalists tosearch for new spatial modes of production.

According to David Gordon (1971), the Marxist per-

spectiveexaminesurbanand regionaleconomicchangeas resulting from the historical evolution in a society’sdominant mode of economic production.Social changeand development are viewed in terms of the inherentconflicts between the capitalist class and the workerclass.Castells (1972)argues that themodernproblem of underdevelopment can only be understood in terms of the historical development of the capitalist mode of




production. Current trends of underdevelopmentreflect the exploitation of particular regions by previ-ously developed capitalist regions, through colonialdomination, commercial domination, or imperialistindustrial and financial domination (p. 44). Castellsargues that we can only understand this process bylooking at the history of political and social relationswithin a region and the particular type of dependencyrelationship that has emerged within the region.Harvey (1985) recognizes that although there is alwaysa tendency toward “balancedgrowth” that is causedbycompetitionfor profits, this state can never be achieveddue to the unbalanced structure of social relations (p.11). This instabilityresults in periodiccrises in capitalistaccumulation and subsequent controlled waves of investment and disinvestment.

Neil Smith (1984) defines uneven development asthe“geographic expression of thecontradictionsof cap-ital” (p.152). Smith draws heavily on Harvey’s work todevelop a view of urban development that is based on

the seesaw process of investment and disinvestment atdifferent spatial scales. The most pronounced scale isthe urban environment, whose rent value is manipu-lated, according to Smith, to ensure capitalist accumu-lation. In contrast to the neoclassical economic view,which sees development as progressing toward equal-ization,Smithsees this tendencyas an inherentparadoxin capitalism that does not produce even patterns of development but instead producesseesawingwaves of development and underdevelopment. Urban areas areinitially developed to accumulate profits. However, dueto the spatial fixity of the investments and the increasedcompetition from new entrants, these profits are unsta-

ble.Once profits beginto fall,areasare completelyaban-doned for new locations in the search for new profits.

Works in the Marxist tradition also focus on the spa-tial dimension of the division of labor. Massey (1984)argues that distance and spatial differentiationarestra-tegic devices employed by capitalists to facilitate capi-tal accumulation. The use of spatial strategies to takeadvantage of the differentiation of the labor forceresults in patterns of uneven development acrossregions. For example, the separation between head-quarters and branch plants may result in substantialleakage of profits from the branch region to the region

housing the firm’s headquarters. The branch regionmay also experience relatively weaker regional multi-plier effects and regional purchases.

Holland (1976)argues that the trendtoward regionalinequality results primarilyfromthe tendenciestowardconcentration among large-scale capitalist industries,which leads to the geographic displacement of labor in

both the manufacturing and the agricultural sectors.

This surplus of labor, which Marx refers to as the“industrial reserve army,” serves to impose disciplineon existing wage workers by reducing the company’sdependence on location-specific labor. Goodman(1979)makes a similar argument in his discussion of the phe-nomenon of “regional rotation.” Here, he argues thatrecent trends in business location within U.S. regionsresemblea pattern similar to crop rotation. By threaten-ing to relocate to other regions,businesses have createdmore favorable conditions for themselves.

Watkins and Perry (1977) rely on a Marxist perspec-tive to explain the emergence of the Sunbelt cities in thesouthern United States. The authors begin with a cri-tique of neoclassical convergence perspectives onregional growth, claiming that “rather than convergence,a more apt analogy can be drawn by considering twotrains headed in opposite directions” (p. 22). Althoughthe Sunbelt and the declining northern U.S. cities mayseem tobe headedtoward a convergent future, once theregions cross paths, they will progress toward separate

destinies. The authors argue that a process of cumula-tive causation is more likely to be driving regionalgrowth than a general tendency toward factor priceequalization.Cumulative causationis not theonlyforceat work in the Sunbelt, however, because this regionwas once a lagging region in apparent decline relativeto the North. The theory of cumulative causation canaccount forthe emergenceand dominanceof oneregionover another, but it cannot explain why some regionsswitch roles from a dominant to a dominated status.

To account for this switch, Watkins and Perry (1977)rely on the Marxist perspective. Emergent cities grow

by enacting barriers that limit the growth of smaller cit-ies, thereby facilitating capital accumulation.However,as industrial structure evolves from one epoch toanother, the barriers erectedby growing capitalist cities

become inflexible and may act to repel new emergentindustries that no longer benefit from the barrierserected during previous epochs. For example, in theUnited States, theerectionof substantial waterway andrail transportation infrastructure in the nineteenth cen-tury served to drive commerce toward emergent urbanmarket areas. With the onset of the industrial revolu-tion, new cities appeared in the Midwest, and oldermercant i l i s t c i t ies became t rapped by the i r

preindustrial ways of doing business. In the next waveof urbanization, federal investments in infrastructureand military-industrial complexes helped to spur thedisproportionate growth of Sunbelt cities, which werethen unencumbered by substantial fixed investmentsor patterns of capital accumulation.

Markusen (1987) combines the Marxist approachwith a variety ofother regionalistapproaches todiscuss




how the uneven spread of capitalism in the UnitedStates has produced economic differentiation at theregional level, which has given rise to unique patternsof regional political conflict. These regional conflictshave in turn been reinforced by the U.S. federal systemof government. Markusen argues that regional politicsmay foster a region’s integration into the larger capital-ist system, or it may foster a divergent path.

4. POLITICAL INSTITUTIONS ANDREGIONAL ECONOMIC DEVELOPMENT

Aside from the works of Markusen and a few Marx-ist theories discussed above, few theories account fortherole of politicsandpolitical institutions in economicdevelopment. Since local politicians and plannersdirectly attempt to influence the rate of growth and thelocation of industry through mixes of tax incentives,land use regulations, and infrastructure provision poli-cies, ignoring this dimension is seen as a substantialweakness of existing theory. Here, two perspectives on

the role of politics in regional economic developmentare reviewed: growth machine theory and the new institu-tional economics.

a) Growth Machine TheoryMolotch (1976) argues that regional growth is a uni-

fying imperative among local political and economicelites. In this theory, the impetus to pursue a strategy of regional growth comes not from structural economicforces or from the equilibrating tendencies created byexports and trade. Instead, it comes from political coali-tions of land-based elites who stand to benefit fromlocal economic development (Wolman 1996). Since this

perspective treats regional growth largely as the causeof local political organization rather than the reverse, itis more accurately seen as a theory of local politics;however, if one assumes that growth machine policiesare effective, then they should have an impact on thelocation economic activity.

Logan et al. (1999) provide an overview of recentdevelopments in the growth machine literature. Thisreview is particularly useful, because it links growthmachines to economic outcomes. If thegrowthmachineperspectiveis tobea usefulcontribution to thetheory of regional economic development, then growthmachines must have an impacton theinterregional dis-tribution of economic activities. The authors concludethat although the impact of pro-growth policies ismixed, growth-control policies do not seem to signifi-cantly affect population growth rates. This suggeststhat the growth machine perspective may be a moreuseful theory of why political coalitions form than atheory of how growth coalitions affect regional eco-nomic outcomes.

b) The New Institutional EconomicsThe new institutional economics is an attempt to

incorporate institutions and institutional change intotheories of economic development. A seminal work inthe new institutional economics is the work of RonaldCoase (1937). Coase argues that various forms of inter-nal economic organization can be traced to the desireamong owners to minimize thetransaction costs of pro-duction. For transactions that involve substantialuncertainties and for which contractual monitoringcosts are prohibitively high, vertically integratednonmarket institutions may have cost savings overmarket forms of organization.

Williamson (1985, 1975) reintroduced the ideas of Coase to a more recent generation of scholars and for-malized the concept of transaction costs. In these twoworks, Williamson argues that transactions arise fromone of two sources: bounded rationality and opportu-nistic behavior of contractual agents. Furthermore,these conditions become more problematic for

exchange relationships when parties to an exchangeuse specific assets whose value is limited outside thescopeof the immediateexchangerelationship.William-son establishes a typology of organizational formsranging from market to hierarchy that each correspondto particular transaction cost dilemmas. The flexiblespecialization theorists discussed above argue that net-works are a form of hybrid organization that lies some-where between markets and hierarchies.

North (1990) applies the insights of Williamson,Coase,and othersin thenew institutional economicslit-erature to propose a theory of economic developmentthat is based on institutional adaptation and change.The essence of his argument is that political and eco-nomic institutions emerge primarily to resolve transac-tion cost dilemmas. The institutions that emerge estab-lish the “rules of the game” for economic exchange anddetermine the expected private returns from invest-ments in the local economy.

North (1991) elaborates on the role of institutions ineconomic development. Using a game theory analogy,North argues that institutions increase the social bene-fits of long-term cooperation. The institutions of capi-talism have grown increasingly more complex due tothe increasing complexity ofeconomicexchanges.Insti-tutional adaptation may either promote or discourageeconomic development. If the institutions that evolveare incompatible with the transaction cost demands of private investors, then a region may not grow. Forexample, if the property rights structure of a societydoes not recognize private contracts among economicagents, informal forms of governance may emerge tofacilitate thecapture of short-term profits among estab-lishedelites whilealso serving toexcludeoutside inves-




tors. Similarly, large vertically integrated firms mayemerge to monitor wage labor if contractswith externalsuppliers are not recognized.

5. EMERGING NEOCLASSICAL PERSPECTIVES

This overview of the theoretical literature onregional economic growth concludes with a discussion

of two new perspectives that attempt to address earliercriticisms of the neoclassical exogenous growth andtradetheories: endogenousgrowth theoryand the neweco-nomic geography.

a) Endogenous Growth TheoryThe new endogenous growth theories modify

assumptions of theexogenousgrowthmodels to gener-atea rangeofeconomicpredictions, some ofwhich tendtoward economic divergence across regions. However,endogenous growth theory stays true to the neoclassi-cal traditionof general equilibrium modeling.The rootsof endogenous growth theory can be traced to early

work by Ramsey (1928), Cass (1965), Koopmans (1965),and Schumpeter (1947, 1934). Models by Cass (1965)and Koopmans (1965) adopt the utility function pro-posed by Ramsey to incorporate a savings rate that isdetermined by household choice, a feature that makessavings rates endogenous to the growth model. Undercertain conditions, the Ramsey-Cass-Koopmans modelpredicts conditional convergence. If the savings raterises with the capital/labor ratio, then the model pre-dicts a slower speed of convergence than the Solow(1956) and Swan (1956) model (Barro and Sala-i-Martin1999).

Other variants of the endogenous growth theories

make technological change and innovation endoge-nous to the model. Schumpeter (1947) was the first topoint out that the process of innovation is largely a raceformonopoly control over thestreamof rents from newinnovations, which are essentially public goods onceintroduced. Arrow’s (1962) “learning-by-doing”framework is within the Schumpeterian tradition byarguing that firms can gain monopoly power over newknowledge through experience in internal production.Innovations are modeled as declining costs that arefunctions of a firm’s previous investments. If a firm caninternalize these costs, they can gain a competitiveadvantage.

Romer (1986) relies on Arrow’s learning-by-doingframework to incorporate technical change as anendogenous parameter within a competitive equilib-rium model of economic growth. Romer’s model is

based on the crucial assumption that knowledge exhib -its increasing marginal productivity characteristics. Inother words, the production of consumption goods ismodeled with a production function that includes the

stock of knowledge and other inputs. This productionfunction assumes increasing returns to scale in the pro-duction of consumption goods, but decreasing returnsto scale in the production of new knowledge, a featurethat ensures mathematical tractability. In Romer’smodel, per capita output may be persistently slowerover time insome countries than others; thus, themodeldeparts from the standard neoclassical exogenousgrowth model by predicting divergence in regionalgrowth rates. Furthermore, the equilibrium outcome isnot necessarily pareto optimal.

Other than an early regional growth model withagglomeration economies and endogenous technicalchange proposed by Harry Richardson (1973), modelsofendogenous growthhave only recentlybegun tocon-sider the role of space and geography in shaping pat-terns of regionalgrowthand decline.Nijkamp andPoot(1998)extendthe Romer-Arrow frameworktoallowforspatial considerations such as factor mobility, the spa-tial diffusion of innovations, and interregional trade.

The authors demonstrate that when these spatial inter-actions across regions are incorporated into a regionalendogenous growth model, the empirical implicationsof themodelareindeterminate.Depending on thespec-ification of the model, absolute convergence, condi-tional convergence, and divergence are all theoreticalpossibilities.

Other recent theoretical models have extended theendogenous growth framework to account for theimpacts of infrastructure investment on regional pro-ductivity. Barro(1990) developsan endogenous growthmodelthat incorporates tax-financed public services.Inthis model, there is a nonlinear relationship betweenpublic investment andprivate output. Increases in gov-ernment spending raise the marginal productivity of capital and labor, assuming a small to moderate ratio of government spending to total output. If this ratio

becomes too large, the distortional effects of taxationpredominate and lead to a declining growth rate.Aschauer (2000) extends Barro’s framework to investi-gate the relationship between changes in public capitalinvestment at the U.S. state level and statewide eco-nomic growth.

Aspecial issue of the Annals of Regional Science(1998)surveys recent developments in regional endogenousgrowth theory. The model discussed by Rosser in thisissue is unique, because it focuses on the impact of infrastructure on private sector coordination ratherthan complementarities between public and privatecapital investment. Drawing on interacting particlesys-tems theory, Rosser demonstrates that infrastructureinvestments, especially communications, logistical net-works, and transportation, allow private sector agentsto coordinate activities across space. However, the




effects of coordination on economicgrowth are unclear.Coordination may result in either of two equilibriumoutcomes: exceptionally high growth or exceptionallylow growth.

Button(1998) reviewsrecent empiricalstudies on therelationship between public investment and regionaleconomic growth and suggests that policymakers

should proceed with caution in deriving policy pre-scriptions based on the evidence. Despite the appear-anceof several studies in the late 1980s that pointed toacorrelation between declining U.S. productivity ratesrelative to other industrialized nations and the dimin-ishing share of U.S. gross domestic product invested innewpublic infrastructure, theexact nature of this corre-lationis still thesubject of much debate. Most criticismsof this literature center on the wide range of estimatesregarding the impact of public investment on privateperformance, the lack of controls for the two-way cau-sality between these two variables, and the lack of agreement over how to define and measure infrastruc-

ture investment. b) The New Economic GeographyPaul Krugman’s “new economic geography,”

although not explicitly a model of regional growth perse, does offer static predictions about the forces thatlead to the emergence of industry clusters. Krugman’sprimary contribution is to incorporate external scaleeconomies and increasing returns into traditional mod-elsof interregional trade.Hiswork relies heavily on thegeneral equilibrium model of monopolistic competi-tion developed by Dixit and Stiglitz (1977).

Krugman’s Geography and Trade (1991) outlines the basics of the new economic geography in a narrativeframework.In Krugman’s“core-periphery” model(notto be confusedwithJohnFriedmann’scenter-peripherymodel), regional clusters of economic activity emergedue to a combination of centrifugal and centripetalforces. On one hand, firms with strong scale economieswill wish to serve national markets from a single loca-tion. To minimize the cost of delivering goods to mar-ket, firms will choose locations with a large localdemand. This, in turn, is most likely to be where indus-tries have already located, because firms desire to beclose to their workers. The implication is that there is aform of circular causation at work: once a significantly-sized manufacturing belt has been established, it willtend to stay in existence. In general, a core-peripherypattern,defined asonewhereallmanufacturing is locatedin the core and all agricultural production is located inthe periphery, is sustainable with some combination of (1) large internal economiesof scale, (2) lowtransporta-tion costs,and/or(3)a large shareof theregionalpopu-lation that is employed in manufacturing.

Although Krugman is generally cited as the origina-tor of the new economic geography, many of Krugman’score ideas canbe traced to Pred (1966), whoputs a twist on traditional export base theory by argu-ing that the share of income spent on the local-servingsector varies with the size of the local market. In otherwords, as the size of the local market grows, it becomesmore profitable to provide a larger share of goodslocally, because larger plant sizes become more cost-effective. The theory ultimately developed by Predcombines the export base concept with the cumulativecausation argument to demonstrate how the export

base multiplier expands along with regional growth(Fujita et al. 1999).

More recent developments in the new economicgeography are summarized in a special August 1999edition of International Regional Science Review that fea-tures selected articles from the World Bank’s TenthAnnual Bank Conference on Development Economicsheld April 20 and 21, 1998, in Washington, D.C. Thetheme of the conference was the link between geogra-phyand theeconomic success of countries and regions.Krugman (1999) suggests that recent models examiningthe role of geography in the economic developmentprocess generally take one of two approaches. The firstapproach explicitly considers the role of geographicfactors such as climate and topography in determiningpatterns of regional growth and decline. Cronon (1991)is oneexample of this approach. Theapproach taken bymost new economic geographers, on the other hand, isto ask why regional economies experience such differ-ent patterns of economic growth when there are no

apparent geographic differences between regions.Krugman (1999) combines these two approaches tosuggest that an understanding of the large effects of seemingly random events—an idea central to the neweconomic geography—can also be used to understandwhy differences in natural geographic features acrossregionscanhavesuch largepersistent effectsover time.

Despite its usefulness in explicitly representing thespatial dimension of regional growth and trade, thenew economic geography models still rely on quiterestrictive assumptions regarding worker mobility,land use, and regional dynamics. Fan et al. (2000) pres-ent a more generalized version of the new economicgeography model that relaxes several of the assump-tions in Krugman’s earlier models. In contrast to earliermodels in the new economic geography tradition, theFan et al. framework allows for worker mobility acrossregions and sectors, introduces a more prominent rolefor land use, and incorporates a more flexible consider-ation of geographic space that allows for multipleregions inone or two dimensions. In the Fanet al. model,




systems of cities emerge endogenously as do differentindustrialstructures anddifferent patternsof landuse.

6. CONCLUSION: TOWARD AN INTEGRATEDTHEORY OF REGIONAL ECONOMIC DEVELOPMENT

It should be readily apparent to the reader that thereare areas of overlap among many of these theories andmuch potential for integration. For example, theMyrdal (1957) and Kaldor (1970) cumulative causa-tion model of growth-upon-growth is similar to thecircular process that holds Krugman’s (1991) coreregions in place. Also, many models such as endoge-nous growth theory and cumulative causation theorycould easily be expanded to incorporate institutionalparameters or parameters that capture structuralchange. Among the newer theories discussed in thisreview, transportationcostsonlyappear within theneweconomicgeography. Transportationcostsin a modelof endogenous growth would be an obvious way to intro-duce realism into the model. Finally, although a few

theories examined attempt to incorporate externaleconomies, few do so in a satisfactory manner. There isstill much to know about the nature of external econo-mies and how institutions may foster the growth of such external benefits.

A few recent works have begun to establish linkages between different branches of theory. Bretschger (1999)integrates elements of endogenous growth theory, neweconomic geography, and traditional location theoryinto a model that considers the long-term impact of intra- and inter-regional knowledge diffusion onregional growth trajectories. Acs and Varga (2002) pro-vide a survey of the neweconomic geography, endoge-nous growth theory, and the literature surrounding theeconomics of innovation and discuss how elements of each of these threeapproachescouldbecombined into amore general model of technology-led regional eco-nomic development. A model outlined by Fujita andMori (1998) combines new economic geography andendogenous growth theory into a model that is used toexplain the “Asia Miracle” and other so-called frontiereconomies.

Several works in theedited volume Theoriesof Endog-enous Regional Growth: Lessons for Regional Policies(Johansson and Karlsson 2001) discuss ways to extendendogenous regional growth theory to account for therole of institutions in regional growth. Of particularinterest are works in this volume by Stough and Har -rington and Ferguson. Stough focuses on leadership, aspecific institutional dimension that is largely ignored

by researchers of endogenous growth. Leadership isshown to be associated with economicgrowthin a sam-ple of U.S. metropolitan areas. Harrison and Fergusonsuggest another way to integrate two strands of theory

by placing the new institutional economics into anendogenous growth context. In this work, the authorsdiscuss several ways in which formal and informalinstitutions structure the labor processes necessary foreconomic growth.

D. Theoretical Perspectives on the Role of Regional Development Planning and Policy

Themost livelypolicy debatethat hasemerged in theliterature concerns thenatureof themarketfailuresthat

justify public intervention and whether these efficiencyinterventions also result in an equitable distribution of wealth across regions, or conversely, whether interven-tions in the name of equity cause interregional ineffi -ciencies. Below, a few seminal arguments in this tradi-tion are reviewed and discussed.

Richardson (1979, 226) defines efficiency and equityin a regionalcontext in thefollowing manner: efficiencyrefers to the maximization of growth in the nationaleconomy. This also implies the optimizationof resource

allocation over time. Equity refers to the reduction ininterregional disparities of income, wealth, and/orgrowth rates. (This definition of equity does not takeinto account other potential intraregional inequitiesthat may exist across class, race, gender, or otheraspatial categories.) Richardson (1979) examines sev-eral cases when the two goals of efficiency and equitymay be compatible. First, as Williamson (1965) sug-gests, regional inequities mayonly bea problem duringthe early stages of a nation’s development. As thenation grows and the economy matures, these inequi-ties may diminish as Williamson demonstrates in hisempirical analysis. Second, if infrastructure and laborare relatively homogeneous across the landscape,underdevelopment may simply be a case of the tempo-rary underutilization of resources in particular regions.Third, some efficiency objectives (e.g., reducing exter-nalities by relocating industries from a congestedregion to a lagging region) may be compatible withequity objectives. Richardson (1979) points to his ownwork to argue for the promotion of “generative”growth, which views interregional development not asa zero-sum game butas thefoundation fornational eco-nomic growth. He argues that regionalplanners should“be committed to fostering favorable growth condi-tions within a region rather than relying solely on thediversion of resources from other regions” (p. 179).

In theneoclassicalmodels, free trade or factormobil -ity combinedwith optimal rates of regional investmentshould eventually lead to an efficient allocation of resources over time and a reduction in the income andgrowth disparities across regions over time, as sug-gested by the convergence hypothesis. If we accept theassumption that marketsare more or less perfect anddo




not question the other assumptions of the neoclassicaltradeandgrowthmodels, wecanconclude that a policyintervention that successfully “corrects” market fail-ureswill achieveefficiency objectives while alsoremov-ing regional inequities. Thus, the goal of equity neednot be considered separately from efficiency; instead,interregional equity follows naturally from improve-ments in theefficient workingsof themarket.Ofcourse,a limitation of this characterization of the policy dilem-mas of equity and efficiency is that the compatibility of these twopolicygoals isheavily dependenton theaccu-racy of the neoclassical models of interregional growthand trade. If we introduce realism into the neoclassicaltrade and growth models by relaxing some of the mod-els’ restrictive assumptions, we find that the conver-gence hypothesis does not always necessarily follow.

Generally speaking, relaxing most of the assump-tions of the HOS model still leaves the model intact. Forexample, the model can easily be extended to allow forseveral regions,commodities, andfactors providedthatthenumber ofcommodities isequal toor largerthan thenumber of factors. Similarly, factor mobility can easily

be incorporated into the model, because it acts as a sub-stitute for interregional trade in bringing about factorprice equalization. With greater factor mobility, lesstrade is requiredamongregions to equalizerelativefac-tor prices (Salvatore 1998).

When we relax the assumptions of constant internaland external returns to scale, homogeneous technolo-gies and tastes, and perfectly competitive markets, theconvergence result no longer holds or only holds for asmaller number of specific cases. New theories of trade

and endogenous regional growth are currently beingdeveloped to incorporate many of these assumptions.Theseexisting models incorporate increasing returns toscale and endogenous growth parameters and tend togenerate a wide range of theoretical predictions, rang-ing fromabsolute convergence to cumulative processesof divergence.

Regarding the assumption of perfectly competitivemarkets,modifications to thisassumptionliewithin thetraditional domain of government policy intervention.Stiglitz (1989) discusses three primary types of marketfailure that tend to impair the market’s ability to pro-duce interregional per capita income convergence overtime: (1) thepublicgood natureof knowledge, (2) infor-mation asymmetries in credit markets, and (3) imper-fect information about product quality. Thesecond twosources of market failure aremore commonly observedat the national scale due to differences in the stability of political-economic institutions and culture acrossnationalboundaries.Themarketfailuresassociatedwithknowledge generation are more pervasive in a regional

context. To see why, it is beneficial to begin with a dis-cussion of the nature of the market failure at hand.

Technological change results from the generation of new knowledge. If knowledge were a purely privategood like other inputs, firms could simply assume thatit was an input into the production process and treat itmuchlikeother inputs.However, sincenewknowledgeexhibits public good characteristics (nonexcludabilityand nonrivalry), the cost to the innovating firm is somepositive quantity, whereas the cost to other firms in theindustry is zero. This creates a typical “free rider”prob-lem that often plagues public goods provision. Theproblem is that if knowledge is a public good, newknowledge will not be provided by the private marketwithout some form of nonmarket intervention thatenables innovating firms to capture rents from knowl-edge generation.

Stiglitz (1989) draws on Arrow (1962) and arguesthat, due to the public good nature of knowledge, tim-ing plays an important role in the generation of new

knowledge. As a region increases its production overtime, thecosts of production may fall, because workers become more experienced at their jobs and producenew knowledge that results in further declines in costs.With this learning by doing, regions that industrializefirst will experience greater cost advantages thanregions that industrialize later. This may actas a barrierto entry for regions that are late to develop. Thus, withlearning by doing, growth ratesbetween industrializedregions and lagging regions may diverge over timedepending on the nature of learning, in particular theextent to which institutions promote learning and thediffusion of learning across regional boundaries.

Several subtleties of the learning-by-doing phenom-enon noted by Stiglitz (1989) affect the extent to whichless developed regions will benefit from theknowledgegenerated in more developed regions. First, learningmay be more or less localized. If knowledge diffusionamong firms does not extend beyond regional bound-aries, then the benefits of knowledge generation willonly be captured by particular regions. For example,U.S. innovations in the electronics industry during the1970s were largely confined to Silicon Valley andBoston’s Route 128 (Saxenian 1994). In this case, theinabilityof regions outside of these tworegions tobene-fit from the knowledge generated suggests that otherregions outside of Silicon Valley may find it difficult tocatch up once regional patterns of innovation have

become well established.Not only is learning localized, but it also generates

other positive externalities such as innovations inrelated industries and improvements in the region’s

business climate. To the extent that these externalities,too, are localized, the benefits of learning will not be




captured by all regions in the national economy. Withthese learning-based externalities, there may also bepositive feedbacks that result in cumulative benefitsover time. Stiglitz (1989) eloquently describes thiscumulative process:

Assumethat thereare twogroups within thepopulation:

innovators and inventors. Inventors generate new ideas;innovators turn them into profitable businesses. Innova-tors search among inventors for new ideas. The moreinventors there are, the more it pays to be an innovator;andthe more innovators thereare, thegreaterthe returnsto invention. (P. 199)

Thus, regions with a large initial supplyof inventorswill tend to attract innovators, which in turn attractsmore inventors. This process closely resembles thedivergent cumulative process of regional developmentdescribed by Myrdal (1957).

A final characteristic of learning by doing that is

important for regional development is “hysteresis.”Here, the extent of learning by doing in any givenperiod may be determined by historical factors such aswars, plagues, or depressions that have permanenteffects on a region’sability to generate newknowledge.Similarly, a region’s ability to learn by doing may bedetermined by its previous history of learning bydoing. For example, Richardson (1979) points out thatlearning maybemore likely in largecities because citiestend to have a disproportionate share of “innovation-adopting elites,” defined as an entrepreneurial classthat is more receptive to new ideas and innovations.

The learning-by-doing phenomenon creates severaldilemmas for regional economic development plan-ners. First, even if knowledge diffused instantaneouslythroughout society once created, it still may beunderprovided, because it would not be economicallyrational for anyprivate inventor to investin thecreationof new knowledge if they immediately lost all gainsfrom knowledge creation. This is the market failureproblem created by the public good nature of knowledge.

Even without the spatial problems discussed above,to increase theprobabilityofknowledgegeneration, theplanner must develop a patentingsystemor other formof knowledge-generating incentive. Sincepatents effec-tively grant monopoly power to the inventor for adefined period of time, the planner is faced with anoptimization problem when deciding whether to issueincentives such as patents. He or she must choose aknowledge-generating institution that maximizes theexpected benefits from new knowledge, taking intoaccount the market distortions resulting from monop-

oly pricing by the innovating firm (Carlton and Perloff 2000).

When the spatial dimension of knowledge genera-tionis introduced, theplanner’s decisionbecomesmorecomplex,because now, thechoice of policy interventionhas implications for both national efficiency and inter-regional equity. With learning by doing, regional

growth is more likely to produce interregional percapita income divergence over time. Thus, even whenthe public good dilemma of knowledge generation has

been resolved in a region like Silicon Valley, the local-ized nature of knowledge diffusion suggests that the

benefits of the new knowledge may not extend beyondSilicon Valley. If there are increasing returns to scale innew knowledge generation, the emergence of a SiliconValley may also draw high-skilled labor away fromother regions in the United States, thus further exacer-

bating interregional inequities in economic growthalong with potential inefficiencies associated with theunderproduction of new knowledge in decliningregions.

Given the nature of this problem, a regional plannerin a declining region may proceed in one of three ways.First, he or she may acknowledge the market imperfec-tions associated with the public good characteristics of knowledgeand work tocreate local institutions, such asfinancial incentives for innovations, business incuba-tors, or other local incentiveprograms, that increase theprobability of local innovation without creatinganticompetitive local monopolies. If successful, thismay restore the competitiveness of lagging regions andrestore trends toward per capita income convergence,

thus simultaneously accomplishing equity and effi-ciency objectives by diverting growth away from moredeveloped regions toward undeveloped regions.

A problem with this approach from Stiglitz’s (1989)perspective is that the nonmarket institutions created

by less developed regions to resolve market failurestend to be less successful in accomplishing this objec-tive than thenonmarket institutions in more developedregions.Forexample, thediffusion of innovationsoftenrequires the presence of mature financial, managerial,and marketing firms. Even if firms have an incentive tocreatenew ideas in lagging regions, they mayhave littleaccess to the financial capital or the marketingresources required to bring their ideas to market. Simi-larly, the probability of interaction and knowledgesharing among local firms may be determined by thenumber ofopportunitiesfor localinteraction. In regionswith declining downtowns and few venues for eating,drinking, andsocializing, workers maynot interact fre-quently enough to cultivate substantial local knowl-edge spillovers.




Another problem is that if financial incentivesoffered by local planners encourage newfirms to locatein an underdeveloped region, when they would havelocated in a more advanced region, then the underde-veloped region may be inefficiently supporting anindustry in a location where it is suboptimal for thatindustry to conduct business. For example, an automo-

bile manufacturing firm may be attracted to a region bygenerous property tax subsidies, only to discover uponlocating in that region that the region’s naturalresources and labor skill level are poorly suited forautomobile production. This may, in turn, reduce theprobability of economic success for that firm, whichwould have negative long-term regional consequencesdue to job losses.

Another approach is to assume the role of a nationalpolicymaker and devise institutions that increase thegeographic spread of knowledge generation across allregions, thereby reducing the localization of knowl-edge generation. For example, a national policymaker

may publish information about local innovations in anoutlet that is accessible to firms in other regions. Theproblem with this approach is that it would likelydestroy the very incentive that leads to the creation of knowledgein thefirstplace: thepotential for monopolyprofits from new knowledge. If the strategy of geo-graphic dispersion of knowledge is chosen, it wouldonly be effective if such dispersal had no effect on themonopoly profits earned by the generators of newknowledge.

Afinal approachis to redistribute some of thewealthgains from rapidly growing regions experiencing newknowledge generation to other regions. This approachis tantamount to intervening directly on equity ratherthan efficiency grounds. Bolton (1992) offers one of themostinteresting perspectiveson thisissue. Thepurposeof his article is to challenge an earlier article by LouisWinnick (1966), which criticized national policiesaimed at improving placesrather than thepeople livingwithin the places. Winnick argued that such place-spe-cific redistributive policies are inappropriate, becausethey tend to result in the subsidized survival of high-cost firms in particular locations, tend to ascribe to anentire region the average characteristics of that regionwithout focusing on the internal heterogeneity of thepopulation, and tend to provide too much support tolocation-bound governments that cannot migrate toescape regional malaise. Bolton challenges Winnick’sargument by pointing to specific instances when place-specific policies may be necessary for economic effi-ciency. This wouldbe thecase if “places” providea pub-lic good valued by society. Regarding the nature of thispublicgood, Boltonpoints to theoption value of places,the pure existence value of places, and the correlation

between donor preferences for redistribution to recipi-ents in specific locations. For example, if entrepreneursin Silicon Valley see an option value, pure existencevalue, or havespecificdonor preferences for redistribu-tion in regions outside of Silicon Valley, then redistribu-tion on equity grounds may be required for efficiencyreasons (Bolton 1992).

The important point here is that although efficiencyand equity are often intertwined when we consider thespatial dimension of market failures resulting fromknowledge generation, the traditional approach toregional market intervention (i.e., “Intervene on effi-ciency grounds and equity goals will be achieved auto-matically.”) need not always be optimal. In fact, it may

be the case that direct interventionon equity grounds ismore likely to accomplish both efficiency and equityobjectives than is intervention on efficiency groundsalone, especially if the institutions in poverty-strickenregions are ill-equipped to resolve market failures andregional growth processes fail to conform to the stan-

dard neoclassical models.To conclude, the convergence-divergence debate isno longer simply an academic debate when viewed inlight of policy issues related to efficiency and equity. If one accepts the convergence hypothesis, then one canassume that lagging regions will tend to grow fasterand approach standards of living in developed regionsover time, and inequities will be resolved in the longrunsimplyby improving thefunctioning of themarket.If, on the other hand, there are substantial marketimperfections in regional trade and knowledge diffu-sion, as suggested by Stiglitz (1989), then market ineffi-ciencies will result in interregional inequities. Theappropriate strategy for improving interregional effi-ciencyand/orequitydepends on thenature of theorig-inal source of divergence and the benefits and costs of diverting the path of growth in the other direction.Either way, theory has much to say about theconsequences.

E. ReferencesCarlton, Dennis W., and Jeffrey M. Perloff. 2000. Modern industrial

organization. Reading, MA: Addison-Wesley.Domar, Evsey. 1946. Capital expansion, rate of growth, and employ-

ment. Econometrica 14, 2: 137-47.Greenhut,MelvinL.1956. Plantlocationintheoryandinpractice. Chapel

Hill: University of North Carolina Press.Harrod, RoyF. 1939.An essay in dynamic theory. Economic Journal49,

193: 14-33.Isard, Walter. 1960. Methods of regional analysis: An introduction to

regional science. Cambridge, MA: MIT Press.Kondratieff, Nikolai D. 1935. Thelong waves in economiclife. Review

of Economic Statistics 17, 6: 105-15.Ricardo, David. 1817. On the principles of political economy and taxation.

London: John Murray.




Winnick,Louis. 1966. Placeprosperityversus peopleprosperity: Wel-fare considerations in the geographic redistribution of economicactivity. In Essays in urban land economics in honor of the sixty-fifthbirthday of Leo Grebler, Real Estate Research Program, University of California at Los Angeles. Los Angeles: Real Estate ResearchProgram.

II. ANNOTATED BIBLIOGRAPHY

A. What Is a Region?

001. Fox, Karl A., and T. Krishna Kumar. 1994. The functionaleconomicarea: Delineation and implications for economicanalysis and policy. In Urban-regional economics, social sys-tem accounts, and eco-behavioral science: Selected writings of Karl A. Fox. James R. Prescott, Paul van Moeskeke, andJatiK. Sengupta, eds. Ames: Iowa State University Press.

In this chapter, the authors discuss their “functional eco-nomic area” concept. Within a functional economic area,the majority of households commute to jobs within theregion, and the majority of goods sold are consumedwithin the region. Functional economic areas, much like

the metropolitan statistical areas identified by the U.S.Census Bureau, are defined by the spatial extent of house-hold commuting areas (Richardson 1978). The UnitedStates Department of Commerce Bureau of EconomicAnalysis (BEA) currently relies on a version of thisapproach to define BEAeconomic areas within the UnitedStates.

002. Hoover, Edgar M., and Frank Giarratani. 1985. Introduc-tion to regional economics. 3d ed. New York: Knopf.

This classic text gives a nice overview of the conceptualfoundations of regional economic development theoryandurban land usetheory. Chapter9 of this book examinesseveral approaches to defining the concept of a “region.”This entire text can be accessed online at the followingURL: http://www.rri.wvu.edu/WebBook/Giarratani/main.htm.

B. Conceptual Foundations of RegionalEconomic Development Theory

1. THE INTERREGIONALCONVERGENCE HYPOTHESIS

003. Balassa, Bela. 1961. The theory of economic integration.Homewood, IL: Irwin.

In this book, Balassa examines the integration of nationaleconomies with particular intereston European countries.Chapter 4 of this book provides a nice overview of the

Heckscher-Ohlin theorem and its implications for Euro-peanintegration.He alsoexamines therole of factormobil-ity in the theory of economic integration.

004. Heckscher, Eli F. 1919. The effect of foreign trade on thedistribution of income. Ekonomisk Tidskrift 21: 497-512.

005. Ohlin, Bertil. 1933. Interregional and international trade .Cambridge, MA: Harvard University Press.

Together, these two works establish the well-known“Heckscher-Ohlin” theorem, which essentially states thatgiven two countries, two export goods, and two factors of production,a factor-abundantcountrywillhavea compar-ative advantage in the production of goods that requirethat factor. Therefore, the country will specialize in, andexport that good, importing goods for which productionfactors are scarce.

006.Salvatore,Dominick. 1998. International economics.6thed.Upper Saddle River, NJ: Prentice Hall.This international economics text provides an excellentoverview and analysis of the Heckscher-Ohlin-Samuelsontheorem and the implications of this model’s assumptionsfor international trade and economic growth.

007. Samuelson, Paul A. 1953. Prices of factors and goods ingeneralequilibrium. Review of Economic Studies21, 1 (Octo-

ber): 1-20.

008. . 1949. Internationalfactor-price equalization onceagain. Economic Journal 59, 234: 181-97.

009. . 1948. International trade and the equalization of factor prices. Economic Journal 58, 230: 163-84.These three articles extend the Heckscher-Ohlin theoremto demonstrate the now-famous result: free trade and/orthe mobility of goods serves to equalize the relative andabsolute prices of factors of production across those coun-tries engaged in trade in the long run.

2. LOCATION THEORY AND REGIONAL SCIENCE

010.Alonso, William.1975. LocationTheory. In Regionalpolicy:Readings in theory and applications, John Friedmann andWilliam Alonso, eds. Cambridge, MA: MIT Press.

Thisarticlegives an overviewof the fundamentalconceptsfrom location theory initially developed by Alfred Weber(1929) and subsequently expanded by Edward Hoover(1937),Walter Isard (1956),andMelvinGreenhut (1956).By1975, the foundations of location theory, as it is reviewed

by Alonso, had become well established. Additional com-plexities examined by Alonso include the influence of assemblycosts anddistributioncosts, therole of transship-mentpoints, and the implicationsof multiplerawmaterialsources and irregularly shaped transportation networksand market areas on optimal plant location. Alonso con-cludes the article by pointing out the limitations of thelocation theory approach, including its static orientation,its ignorance ofexternalscale economies, andthetendency

of early theories to treat demand as exogenous.011. Isard, Walter. 1956. Location and space-economy. Cam-

bridge, MA: MIT Press.A comprehensive exposition of traditional location theoryas originally developed by Alfred Weber (1929) and EdgarHoover (1937).Theworkalso incorporates the market areaconcept developed by Christaller (1933) and Losch (1954)as well as the relationship between location theory and




international trade theory. Chapter 10 provides a mathe-matical formulation of Isard’s general theory of location.

012. Isard, Walter, Iwan J. Azis, Matthew P. Drennan, RonaldE. Miller, Sidney Saltzman, and Erik Thorbecke. 1998.

Methods of interregionaland regionalanalysis. Brookfield,VT:Ashgate.This book is Walter Isard’s sequel to the seminal regional

science text, Methods of regional analysis: An introduction toregional science (1960). The text presents a summary of thestandard methodological approaches to analyzingregional economies. Included in the discussion are tradi-tional techniques suchas comparativecostanalysis,input-output analysis, linear and nonlinear programming, andgravity and spatial interaction models in addition to morerecent methods of analysis including spatial econometrics,computable general equilibrium models, and spatialmicro-simulation.

013.Weber, Alfred.1929. Theory of the locationof industries. Chi-cago: University of Chicago Press.Thebeginnings of location theorycan be tracedto this clas-

sic by Alfred Weber. In essence, this work is an attempt toincorporate transportation costs intothe theory of thefirm.In Weber’s theory, transportation costs are influenced byweight and distance. He assumes that demand is givenand that firms seek to minimize the costs of transportingraw materials and final goods to the market. If naturalresources and raw materials areconcentrated in particularlocations, andthe weightof the raw material is heavy rela-tive to the weight of the final product, the firm’s produc-tion activities are “weight losing.” These firms will locatenearinput sources,while “weight-gaining”firms willtendto locate near consumer markets. This simple idea has

become the foundationof modernlocationtheory. Chapter5 of Weber’s book also contains an early discussion of

agglomeration economies.3. EXTERNAL ECONOMIES

014. Hoover, Edgar M. 1937. Location theory and the shoe andleather industry . Cambridge, MA: Harvard UniversityPress.In chapter 6 of this classic work, Edgar Hoover developshis well-known typology of agglomeration economies inresponse to the oversimplification of this concept inWeber’s (1929)work.Hoover argues that thebenefits fromagglomeration include (1) large-scale economies resultingfrom traditional economies of scale; (2) localization econo-mies that result from the firms in the same industry

colocating in the same area; and (3) urbanization economies,which result from the colocation of firms in differentindustries.

015. Marshall, Alfred. [1890] 1961. Principles of economics: Anintroductory volume. 9th ed. Reprint, London: Macmillan.

In this classic text, Alfred Marshall became the first tomake the distinction between internal and external scaleeconomies. Internal scale economies are generated inter-nally by individual firms that either expand their internalscale of operations to minimize average production costs(traditional economies of scale). External scale economiesrefer to declines in firm-level averagecosts thatresult fromincreases in industry-wide output within a given region.

Examplesof externalscale economies include thespillover benefits that result from a specialized local labor force, alarge diverse supply of input providers, and informationsharing among firms within a region. The metaphor of the“Marshallian industrial district,” fueled by these externalscale economies, is a keyconcept in most recent theoriesof regional economic development. It is this emphasis onlocal external scale economies that also differentiatesmany theories of regional economic development fromtheories of national economic development.

4. MODELS OF SPATIAL COMPETITION

016.Devletoglou, Nicos E. 1965. Adissenting viewof duopoly

and spatial competition. Economica 32, 126: 140-60.This article extends Hotelling’s (1929) spatial pricingapproach by introducing realism into the model. Theextensions examined by Devletoglou include consumerdemand uncertainty and elasticity, the threat of entry bycompetitors, and an additional spatial dimension to con-sumer market areas. (In the Devletoglou model, consum-ers are distributed along a plane rather than along a linesegment as in the Hotelling model.) With these additionalassumptions, Devletoglou demonstrates that under cer-tain conditions, firms will tend toward dispersion ratherthan concentration, as in the Hotelling model. In theDevletoglou model, the threat of entry drives all profits tozero.

017. Eaton, B. Curtis, andRichard G. Lipsey. 1978. Freedom of entry and the existence of pure profit. Economic Journal 88,351: 455-69.This article extends the model by Devletoglou (1965) todemonstrate how a spatial equilibrium distribution of firms need not necessarily driveprofits to zero. Accordingto Eaton and Lipsey, there is no incentive for new firms toenter, because fornewfirms, all costs arevariable, whereasfor existing firms, all fixed costs are sunk and therefore donot bear on current production decisions.

018. Hotelling, Harold. 1929. Stability in competition. Eco-nomic Journal 39, 153: 41-57.Thisclassic of the industrial organization literature has ledto the emergence of a large literature that examines howspace affects the pricing behavior of firms. Although notalways identified as part of locationtheory perse, theliter-ature on spatial competition that begins with Hotelling




provides a nicecompanion to thesupply-side location-the-oretic approach pioneered by Alfred Weber (1929).

5. CENTRAL PLACE THEORY

019. Christaller, Walter. [1933] 1966. Central places in southernGermany. Trans. Charlisle W. Baskin. London: PrenticeHall.Christaller, a German geographer, presents the firstformu-lationof central place theory. Hisversion of thetheory wasdeveloped primarily as a descriptive tool for explainingthedistribution of citiesof differentsizes across space.Theessence of Christaller’s original argument is that if oneconsiders transport costs alone, the optimal configurationof market areas forindividual firms is a pattern of adjacenthexagons.Since some market areas will be larger for somefirms than others, a hierarchy of urban centers emergesnaturally from the concentration of several-sized marketareas in particular areas. Those placeswith themost diver-sity in the range of goods offered are defined as “centralplaces.” In general, central place theory predicts that (1)towns of a given size will be located roughly the same dis-tance apart; (2) there will be few large cities and manysmall cities dispersed throughout economic space; (3)small towns exist to serve local customers, whereas largecities serve local markets and customers from smallertowns.Christaller relies onhistheory toexplain thespatialdistribution of towns within southern Germany.

020. Losch, August. 1954. The economics of location. New Ha-ven, CT: Yale University Press.Losch largely expands on the initial ideas of Christaller(1933) andplaces theminto an economiccontext, introduc-ingthe idea of a “demandcone” into thehexagonalmarketarea framework developed by Christaller. Central placesare large diversified urban areas that have a range of eco-

nomic activities operating at varying scales. Losch definesan optimal central place, referred to as the “urban cog-wheel,” that has the highest diversity of market offeringsfor regional customers.

021. Mills, Edwin S., and Michael R. Lav. 1964. A model of market areas withfreeentry. Journal of Political Economy72,3: 278-88.Mills andLavchallengeLosch’s (1954) contention thatfreeentryamong firms results in an equilibrium outcome withhexagonal market areas and no spaces between marketareas. In particular, the authors demonstrate that with cir-cular market areas, there may be open spaces betweenadjacent market areas that are not filled by new firms

under conditions of free entry. In other words, some firmsmay continue to earn positive profits over some regionunder conditions of spatial competition. This is an impor-tant result, because it implies that spatial competition maynot necessarily produce an optimal social outcome.

C. Alternative Theories of RegionalEconomic Development

1. THEORIES OF REGIONAL ECONOMIC CONVERGENCE

a) Economic Base Theory

022. North, Douglass C. 1956. Exports and regional economicgrowth: A reply. Journal of Political Economy 64, 2: 165-68.

In this article, North replies to Tiebout’s criticisms (1956a)of the export base model by pointing out that the model isintended to be viewed as a long-run model of economicgrowth that may not always be applicable in the short runwhencertain factorsofproductionare fixed andimmobile.

023. . 1955. Location theory and regional economicgrowth. Journal of Political Economy 63, 3: 243-58.Theauthorproposesthe exportbasemodel of regional eco-nomic growth by linking two previously disparate

branches of economic theory: location theory and regionaleconomicdevelopment theory. He begins by criticizing the“stages” perspective of Edgar Hoover and Joseph Fisher(1949) that views regional development as progressthroughvarious stages. North argues that this perspectiveis largely inconsistentwith realityandfails to explain whyregions progress through the various stages of growth.Instead, North argues that regional development duringthe modern era has emerged primarily from the efforts of capitalists to exploit regional resources to meet demandson theworld marketand notfromthegradual progressionof an economy from subsistence to more advanced formsof exchange.

024. Richardson, Harry W. 1978. Regional economics. Urbana:University of Illinois Press.On pages 84-92, Richardsonpresents three formalversionsof exportbasetheory thatare useful forempiricalanalyses.Model 1 assumes that nonbase income is a stable functionof total income and total income is a multiple of baseincome. Model 2 employs a Keynesian-typeapproach thatdecomposes expenditures intodomestic spending, importspending, and export spending. Model 3 presents theexport base model as a growth model that examinesincome changes over time. This allows income to evolvedifferently for basic and nonbasic sectors.

025. Tiebout, Charles M. 1956a. Exports and regional eco-nomic growth. Journal of Political Economy 64, 2: 160-64.Tiebout places North’s export base model (1955) within amore general framework that accounts for the influence of

regional growth on per capita incomes. North’s model,according to Tiebout, ignores the importance of manyimportant supply-side factors, which ultimately affect aregion’s ability to support an emerging export base. Healsocriticizes North’sarticle by pointingto other instances




whenexportsarenot thesoledeterminantsof regional eco-nomic growth. Another contribution of this article is theintroduction of the regional multiplier concept. Theregional multiplier measures the ratio of “basic” to“nonbasic” regional economic activities. This multiplier isone useful way to quantify the impact of an increase inexogenous demand on overall levels of regional growth.

026.

. 1956b. Exports and regional economic growth:Rejoinder. Journal of Political Economy 64, 2: 169.In this fourthand final article in theNorth-Tieboutdebate,Tiebout reiterates that theexport base concept is merelyanoversimplifiedversionof more sophisticated generalequi-librium national per capita income models. Furthermore,the “stages” theory of economic growth that North criti-cizes is not necessarily wrong, according to Tiebout.Instead, it is only applicable for a more limited number of cases.

b) Neoclassical Exogenous Growth Theory

027. Barro, Robert J., and Xavier Sala-i-Martin. 1999. Economic growth. Cambridge, MA: MIT Press.This book provides an excellent overview of the modernneoclassical theory of economic growth with emphasis onnational economic growth. The introduction provides anoverview of the relevant literature in this field. Chapter 9provides an extension to the standard model that allowsfor labor migration—an extension that is necessary toapply the model in a regional context.

028.Borts,George H.1960.The equalization of returnsand re-gional economic growth. American Economic Review 50, 3:318-47.This article reconciles two competing explanations forregional differences in growth rates: supply-side differ-ences in production functions and/or input costs versusdifferences in export product demand. After proposing amodel and examining empirical data, Borts finds thatmovementsof capital andthe growth of wage ratesamongstates in the United States were primarily in response todemand shocks, thus suggesting that regional export basemodels are useful ways to model regional economicgrowth. With regard to interregional wage convergence,Borts argues that the likelihood of this outcome in thefuture depends on three factors:migration from low-wageareas to high-wageareas,eliminationof thedisproportion-ately high birth rates in low-wage areas, and capital rein-vestment in low-wage areas.

029. Borts, George, andJeromeStein.1964. Economic growth ina free market. New York: Columbia University Press.This is one of the few works to consider both the supplyand demand side of the market as it affects regional eco -nomic development with particular emphasis being paidto theformer. Chapter 7 discusses theoveralltheorydevel-oped from several empirical regularities observed in ear-lier chapters.This model is basically an extension of extant

neoclassical exogenous growth models developed toexplain national growth, with modifications to allow forthe openness of regional economies. These modificationsallow for net capital and labor flows, which are treated asexogenous in the Borts-Stein model.

030. Perloff, Harvey S., Edgar S. Dunn Jr., Eric E. Lampard,and Richard F. Muth. 1960. Regions, resources, and economic

growth. Baltimore: Johns Hopkins University Press.Thiswork is offeredas a departure from traditionalexport-and sector-based theories of regional growth, both of which were predominantparadigms for regional develop-ment during the 1950s. Without dispelling of either view,the authors examine a wealth of empirical data to demon-strate that the reality of regional growth and decline ismuch more complex than either theory dares admit. Con-sistent with neoclassical theories of regional growth, theauthorsfind evidencethat percapita incomesin theUnitedStates have indeed tended toward equalization over time.Despite this overall trend, the authors also find great vari-ety in regional paths toward economic development. Thethree regionsthathad below-average percapita incomes in

1880were stillbelowaverage in 1957(p.51).Regarding thevolume of growth, some regions experienced more rapidgrowth during the period examined than other regions.

031. Solow, Robert M. 1956. A contribution to the theory of economic growth. Quarterly Journal of Economics 70, 1: 65-94.

032.Swan,TrevorW. 1956. Economicgrowthand capitalaccu-mulation. Economic Record 32, 44: 334-61.Together, these two articles provide the basis for the neo-classical exogenous growth model. Althoughearlier mod-els of economic growth were also proposed by Roy F.Harrod (1939) and Evsey D. Domar (1946), the Solow-Swan models have been much more influential in moderngrowth theory.

033. Williamson, Jeffrey G. 1965. Regional inequality and theprocess of national development: A description of the pat-terns. Economic Development and Cultural Change 13, 4: 158-200.Although this is an empirical work, it has much to sayabout regional inequalities in national and internationaldevelopment patterns. Williamson argues that regionalinequality is likely to increasein theearly stages ofnationaldevelopment for several reasons. First, labor migrationrates are unequal due to differences in the costs of migra-tion and differences in the way migrant workers are per-ceived vis-à-vis indigenous workers. Second, initialendowments or constraints, external economies of scale,and immature capital markets in some regions mayimpede equal capital flows across regions. Third, centralgovernmentpoliciesmaybe biased towardregionsthat aremore politically mobilized or where economicgrowth cre-ates the need for additional capital investments. Finally,there may be few interregional linkages in the early stages




of national growth. Williamson hypothesizes that theseinequalities are most likely to appear in the early stages of national growth but are likely to equalize North-Southinequalities over time. Using a variety of empirical meth -ods ranging from cross-sectional comparisons to time-series analysis, Williamson presents evidence to supportthis hypothesis. Williamson also finds that inequalities aremore pervasivein theagricultural sectorthan in theindus-

trial sector.2. THEORIES OF REGIONALECONOMIC DIVERGENCE

a) Cumulative Causation Theory

034. Dixon, Robert J., andAnthony P. Thirlwall. 1975. Amodelof regional growth rate differences on Kaldorian lines. Ox-

ford Economic Papers 27, 2: 201-14.

This is one of the first formal presentations of the cumula-tive causation theoryas developedby Myrdal. In theirder-ivation, the authors find that the cumulative causationdoes not necessarily predict interregional divergencegiven reasonable model parameter values.

035. Kaldor, Nicholas. 1970. The case for regional policies.Scottish Journal of Political Economy 17, 3: 337-48.

This article elaborates on and expands Myrdal’s theory of cumulative causation (Myrdal 1957). Kaldor’s contribu-tion is to introduce ideas from export base theory and theconcept of an efficiency wage to lend more formalism tothe Myrdal model.

036. Myrdal,Gunnar. 1957. Economic theory and underdevelopedregions. London: Duckworth.

The roots of cumulative causation theory can be traced tothis seminal work. Here, Myrdal challenges the neoclassi-

cal economic proposition that unfettered trade betweenregions would ultimately lead to a reduction in inequali-ties across regions. Instead, Myrdal argues, increasingreturns to scale results in the clustering of economic activ-ity within regions that are first to industrialize. Moreover,theprocess of growth tends to feed on itself through a pro-cess that he describes as cumulative causation.

037. Setterfield,Mark.1997. “Historyversusequilibrium”andthe theory of economic growth. Cambridge Journal of Eco-nomics 21, 3: 365-78.

This article presents a mathematical extension of theKaldorian model of cumulative causation as formalized byDixon and Thirlwall (1975). Alternative equilibrium anddisequilibrium formulations of the model are discussedalong with the implications of eitherapproach. Theauthoralso extends the disequilibrium approach to allow for the“lock-in” effects of prior institutional and technologicalregimes.

038. Skott, Peter, andPaul Auerbach. 1995. Cumulative causa-tion and the“new” theories of economicgrowth. Journal of Post Keynesian Economics 17, 3: 381-402.

The cumulative causation theory is examined in light of the new endogenous growth theories to determine if thetwo are complements or substitutes. Although the earlyauthors in the cumulative causation tradition were quickto criticize neoclassical economic approaches to growth,recent development in endogenous growth theory incor-porate ideas that were fundamental to cumulative causa-tion theorists, especially increasing returns to scale. The

authors conclude that while the new endogenous growththeories appear to offer many significant advances overthe simple cumulative causation model, new growth the-ory relies on many unrealistic assumptions and fails toaccount for the role of institutions in the growth process.

b) Growth Pole Theory

039. Boudeville, Jacques Raoul. 1966. Problems of regional eco-nomic planning. Edinburgh: Edinburgh University Press.This book is one of the first attempts to place Perroux’s(1950) abstract theories about spatial relations amongfirms into a regional context based on geographic space.

040. Darwent, D. F. 1969. Growth poles and growth centers inregional planning:Areview. Environment andPlanning 1,1:5-31.This is a review and critique of many major works in thegrowth pole/growth center tradition. Darwent’s criti-cisms of growth pole theory largely focus on the theory’slimited ability to offer an explanation for the urbanizationprocess. The limitations of growth pole theory in thisrespect are largelydue to the initial aspatial formulationof the theory by Perroux (1950). Authors since Perroux, par-ticularly Friedmann (1972) and Boudeville (1966), haveattempted to remedy this problem by incorporating spaceinto the concept of a growth center. Unfortunately, thegrowth center literature suffers many of the same flaws as

theearly growthpoleworks. In particular, Darwentarguesthat the theory is primarily a descriptive theory thatoffersno account of the actual processes that cause growth tooccur and cause some growth poles to grow faster thanothers.Theexplanatorybasis ofgrowthpoletheorylargelyhinges on an oversimplification of input-output relation-ships between “propulsive” and “affected” industries,thus ignoring external economies within the region anddemand shifts external to the region.

041.Friedmann,John.1978.Thespatialorganization of powerin the development of urban systems. In System of cities,Larry S. Bourne and James W. Simmons, eds. New York:Oxford University Press.

Friedmann further discusses his views of spatial patternsof dependency.

042. . 1972. Ageneral theory of polarized development.In Growth centers in regional economic development, Niles M.Hansen, ed. New York: Free Press.Thisarticlepresentsa more fine-tuned versionof the initialcore-periphery model developed in Friedmann (1966).Thecore-periphery model expressed here places more empha-




sison therole of innovation inmaintainingthespatial core-peripherypattern and discusses the role of social relationsin legitimizing the innovations adopted by the core.Friedmann also points out that while the core-peripherypattern is relatively stable, the tensions in the patterns of authority-dependency relationships may eventually pro-duce undesirable social outcomes.

043.

. 1966. Regional development policy: A case study of Venezuela. Cambridge, MA: MIT Press.

Friedmann’s center-periphery model is largely based onGunnar Myrdal’s (1957) theory of unbalanced regionalgrowth, but it also incorporates elements of export basetheory and a discussion of the role of local leadership indetermining a region’s growth trajectory.

044. Hermansen, Tormod. 1972. Development poles and de-velopment centres in national and regional development.In Growth poles and growth centres in regional planning ,Antoni Kuklinski, ed. Paris: Mouton.

This chapter gives a thorough and critical review of thediverse growth pole literature. It also makes useful link-ages between growth pole theory and related works incumulative causation theory andcentral place theory. Thiswork,in addition tothe 1969workby Darwent,offers earlycriticisms of a theoretical perspective that was at thetime awell-accepted paradigm among regional developmenttheorists.

045. Higgins, Benjamin. 1983. From growth poles to systemsof interaction in space. Growth and Change 14, 4: 1-13.

In this article, Higgins reexamines the growth pole litera-ture in light of its criticisms that emerged in the 1970s andthe reemergence of the termin the early 1980s. Among themajor criticisms discussedby Higginsarethe lackof coher-

ence between traditional notions of growth poles andempirical reality, the inappropriate use of input-outputanalyses to examine the spatial interactions among firms,and the difficulties of translating Perroux’s (1950) originalabstract formulation into useful theories of regional eco-nomic development.

046. Hirschman, Albert O. 1958. The strategyfor economic devel-opment. New Haven, CT: Yale University Press.

The author offers an alternative to the prevailing balancedgrowth paradigm,also referred to as the“theory of the bigpush”(p. 51),whichessentially states thateconomic devel-opment requires the simultaneous development of a largenumber of newindustries to support the linkages requiredfor steady growth. Hirschman argues instead for a theoryof economic development based on the concept of back-ward andforward linkages among firms.Fora given firm,

backwardlinkages refer to the inputsof other firms used inthe production process, whereas forward linkages refer tothe output of the firm that is then used by other local pro-ducersas an intermediate good forthe production of otherproducts (p. 100).

047. Lasuen, Jose Ramon. 1972. On growth poles. In Growthcenters in regional economic development, Niles M. Hansen,ed. New York: Free Press.

This chapter is a reinterpretation of Perroux’s (1950) initialpolarization concept in light of more recent policiesdesigned to promote the development of growth poles.Lasuen argues that due to recent transportation innova-tions and inter- and intrafirm organizational changes,growth and development haveresulted in less geographicpolarization than in the past (p. 34). Lasuen recommendsthatdeveloping regions adopt policies to foster these link-ages, pointing to the case of Japan as an example. Thischapter points to other possible links between the growthpole literature and the network/flexible specialization lit-erature that would eventually emerge in the 1980s.

048.Perroux, Francois. 1950. Economicspace: Theory and ap-plications. Quarterly Journal of Economics 64, 1: 89-104.

This is theseminal work in thegrowth pole/growthcentertradition. Although Perroux’s initial formulation of thetheory only treats space in the abstract, his ideas about the

spatial relationships between economic agents were even-tually developed by Boudeville (1966) and others into aspatial account of economic growth through polarizingforces among interdependent firms and industries in par-ticular locations. Perroux defines three ways to definespace:space as defined bya plan, space defined asa sumof forces, and space as a homogeneous aggregate (p. 94). Hisarticle explores each conceptualization of space by exam-ining the spatial dimension of monetary flows andnational sovereignty. The concept of the growth pole hascome to adopt the “space as force” view of spatial interac-tion, which defines space as a type of network that is heldtogetherby centripetal forces. Although this view of spaceis not unlike that which is advocated by those in the flexi-

ble specialization/network theory tradition, the two theo-retical perspectives have largely developed in isolationfrom one another.

049. Thomas, Morgan. 1972. The regional problem, structuralchange, and growth pole theory. In Growth poles and growthcentres in regional planning , Antoni Kuklinski, ed. Paris:Mouton.

This chapter seeks to address the failure of growth pole-inducedpolicyprescriptions toresult ina significant rever -sal of unbalanced growth trends. The failures of growthpole theory appear in its inability to account for structuralchangewithingrowthpoles over time andthe lack ofexist-ing knowledge about the spatial dimensions of growth(p. 75). Thomas addresses the former by discussing the

behavioral foundations of growth pole theory. In particu-lar, theauthor is concernedwith identifying theactual pro-cesses underlying industrial change within growingregions. Thomas also calls for the incorporation of adynamic version of location theory into the growth poleframework as a way to understand the spatial dimensionof growth.




3. STRUCTURALIST THEORIES

a) Stage/Sector Theories

050. Henderson, J. Vernon. 1974. The sizes and types of cities. American Economic Review 64, 4: 640-56.In this seminal theoretical argument linking industrystructure to city size distributions, Henderson suggests

that the optimal size of any given city will depend on itsrole,which isa functionof theindustry structure that dom-inates the city.

051.Hoover, EdgarM., andJoseph L. Fisher. 1949.Research inregional economic growth. In Problems in the study of eco-nomic growth, Universities-National BureauCommittee onEconomic Research. New York: National Bureau of Eco-nomic Research.This work presents an early stage theory of regional eco-nomic growththatviewseconomicdevelopmentas a natu-ral progression through various sectoral changes, ulti-mately resulting in the emergence of a specialized export

base industrial economy.

052. Pred, Allan. 1977. City systems in advanced economies.Berkeley: University of California Press.In this work, the author outlines the historical contextunderlying the economic development of city systems. Acentral premise of the work is that “spatial biases” in theflow of information tend to give incumbent urban centersan advantage in economic growth.

053. Rostow, Walt W. 1977. Regional change in the fifthKondratieff upswing. In The rise of the Sunbelt cities, DavidC. Perry and Alfred J. Watkins, eds. Beverly Hills, CA:Sage.In this chapter, Rostow explores the implications of the“Fifth Kondratieff Upswing” on regional economic devel-opment, particularly in the declining cities in the north-eastern United States. The term Kondratieffcyclerefers toanempirical regularity recognized by the Russian economist,Nikolai Kondratieff (1935). He found thatcapitalist econo-mies tended to ebb and flow in cycles of forty to fifty years(p. 88). Rostow points to historical shifts in the relativeprices of foodand rawmaterials relative to manufacturinggoods as an explanation for these cycles. Initial upswingsin the cycle occur as food and raw materials become scare.Historically, this has been followed by the discovery of new resource fields in “frontier” regions, which serves toreduce prices for commodities and produce a downswingin the Kondratieff cycle. Rostow argues that this is a pri-mary reason for the growth in Sunbelt cities in the twenti-ethcentury. Since theSouthhas been a netexporterof agri-cultural products, increases in food and energy prices inthe 1970s spurned the growth of the region and led to thedecline of thefoodand energy poor regions in thenorthernUnited States.

054. . 1956. The take-off intoself-sustained growth. TheEconomic Journal 66, 261: 25-48.

Rostow discusses the three distinct periods of economicgrowth: (1) a long period in which the preconditions forgrowth are established; (2) the takeoff period, which refersto rapid growth that occurs within the span of a fewdecades; and(3) a long period of self-sustainedgrowth.Hefocuses on the conditions that prepare and boost societiesinto the “takeoff” stage.

055. Schumpeter, Joseph. 1947. Capitalism, socialism, and de-mocracy. New York: Harper.

056. . 1934. The theory of economic development. Cam- bridge, MA: Harvard University Press.Schumpeter’s work has had tremendous influence onmany more modern theories of regional economic devel-opment, especially network theory and endogenousgrowth theory. His influence can also be seen in many“neo-Schumpeterian” approaches to economic develop-ment that have yet to take on a regional dimension and arethus not discussed in this review. In terms of regional eco-nomic development theory, Schumpeter is probably mostwell-known for his theories linking economic develop-

ment to innovation. These ideas eventually become the basis for ideas developed by Arrow (1962) and Romer(1986) on endogenous growth theory. Schumpeter arguesthattraditionaleconomicperspectives on economicdevel-opment have been largely limited due to the inability of general equilibrium models to account for innovation.Instead, economic development follows a process that islargelypathdependentandevolutionary. He describes theprocess of innovation as one of “creative destruction,”where firms constantly search fornew ways of doing busi-ness. In chapter 8 of the second book, Schumpeter arguesthat the process of innovation is largely a race for monop-olycontroloverthestreamofrentsfromnewinnovations.

057. Thompson, Wilbur R. 1968. A preface to urban economics.Baltimore, MD: Johns Hopkins University Press.Chapter 1 presents a version of the stage theory of urban/regional economic growth that is criticized by DouglassNorth (1955). Accordingly, urban areas grow by progress-ing from an early stage in which the local economy islargely equated with a single large industry or firmthrough various phases of export-led growth until theexport of services becomes a major function in the finalstage. At some point during this development process, a“ratchet” effect occurs, where growth patterns becomelocked intoplace and future contraction becomes unlikely.While Thompson’s work is usually not equated with thenew economic geography, the concept of an urban ratchetis similar to the critical mass concept employed byKrugman (1991).

b) Profit/Product Cycle Theories

058. Markusen, Ann. 1985. Profit cycles, oligopoly, and regionaldevelopment. Cambridge, MA: MIT Press.Markusen’s profit cycle theory is an attempt to offer analternative to neoclassical supply-side and demand-side




theories of regionalgrowth by emphasizing the role of sec-toral dynamics and oligopolies in regional developmentand change.

059. Taylor, Michael. 1986. The product-cycle model: A cri-tique. Environment and Planning A 18, 6: 751-61.The author summarizes the product cycle and offers sixdifferent criticisms of the approach.

060. Vernon,Raymond.1966.International investment andin-ternational trade in the product cycle. Quarterly Journal of Economics 80, 2: 190-207.The product cycle approach to regional development isdescribed.

061. Weinstein, Bernard L., Harold T. Gross, and John Rees.1985. Regional growth and decline in the United States. NewYork: Praeger.Chapters 2 and 5 give an overview of several theories of regionaleconomic growth and decline that serve as a foun-dation for the empirical work performed in the remainderof this book. In chapter 5, the authors elaborate on aregional version of Vernon’s product cycle hypothesis(1966) and rely on the theory to discuss regional develop-ment in the United States.

c) Industrial Restructuring Theories

062. Bluestone, Barry, and Bennett Harrison. 1982. Thedeindustrialization of America. New York: Basic Books.Theauthorsdiscuss howthe internationalization of capitalflows has resulted in the disinvestment in U.S. communi-ties. This disinvestment has occurred through the cross-subsidization of new product development, the lack of new investment in depreciating fixed capital, the physicalrelocation of plants and equipment, or finally through the

shutdown of entire plants (p. 7). This disinvestment innational productive capacity has in turn resulted in thedestruction of social and community ties in many regionsof the United States.

063. Danson,MichaelW. 1982. The industrial structure and labor market segmentation: Urban and regional implica-tions. Regional Studies 16, 4: 255-65.Danson demonstrates how the emergence of a dualistindustrial structure hasbeena primarycause of thestratifi-cation and segmentation of the labor market.

064. Fainstein, Susan S. 1996. The changing world economyand urban restructuring. In Readings in urban theory, Susan

Fainstein and Scott Campbell, eds. Cambridge, MA:Blackwell.Fainstein argues that there are two alternative paradigmsforunderstanding cities.Ononehand, cities canbe viewedas components of an international political-economic“world system.” Acontrasting perspective is to view citiesfrom the inside out,examining thepolitical, economic, andsocial forces thatmake particular regionsunique. Fainsteinexamines both paradigms in turn. When viewed from the

outside, cities are coming to terms with an increasinglydynamic global environment. In this new environment,the local business climate and access to local markets is

becoming more important than access to raw materials.When viewed from the inside, differences in the extent of government entrepreneurship, the amount of local plan-ning,the levelofpriority placedon those inneedinteract todetermine the path that local policymakers will choose to

foster economic development.065.Harrison, Bennett. 1985. The tendency toward instability

and inequality underlying the “revival” of the New Eng-landeconomy. In Economicprospects for the Northeast, HarryRichardson and Joseph Turek, eds. Philadelphia: TempleUniversity Press.

This chapter examines how the shift from a manufactur-ing-based economy toward a high-tech economy in theNewEnglandregionhas affectedworkers.The authorcon-cludeS that the restructuring has led to the disappearanceof semiskilled jobs due to relocation by large industriesand the“deskilling”of thelabor force.The latterpractice iscited asonemeans of loweringwage costswhile increasingmanagerial control over the workforce.

066. Leigh, Nancey Green. 1994. Stemming middle class decline:Thechallenges to economic development planning. NewBruns-wick, NJ: Center for Urban Policy Research.

Leigh examines the shrinking relative size of the middleclass from the late 1960s to the late 1980s by examiningtrends during this period in the proportion of workersmaking between 50 and 200 percent of median income.Essentially, she argues that the relative decline can beattributed to the relative increase in the number of upperincome full-time workers. During this period, the relativesize of the low-income group has remained relatively con-stant. However, since the cost of goods affordable to themiddle class has risen substantially while nonwageemployment benefits declined proportionately, middle-class standards of living havebeenincreasingly more diffi-cult to attain.

067. Massey, Doreen, and Richard Meegan. 1982. The anatomyofjob loss:The how, why, andwhere ofemployment decline.Lon-don: Methuen.

Thisbookexaminesthe geography of employmentdeclineand how firms use job elimination as a corporate strategy.The authors begin by examining three different corporatestrategies that typically lead to job loss and then go on todiscuss howregionsareaffected in different waysdepend-

ing on the nature of the strategy leading to employmentdecline.

068.Moulaert,Frank, ErikSwyngedouw, andPatriciaWilson.1988. Spatial responses to Fordist and post-Fordist accu-mulationand regulation. Papers of theRegionalScience Asso-ciation 64: 11-23.

Theauthors present a review of theregional dimensions of post-Fordist industrial restructuring.




069. Noyelle,Thierry J., andThomas M. Stanback Jr. 1983. Theeconomic transformation of American cities. Totowa, NJ:Rowman and Allanheld.This book contains an examination of the U.S. transforma-tion to a service sector economy and its impact on metro-politan areas.

070. Sassen, Saskia. 1988. The mobility of labor and capital: A

study in international investment and labor flow . Cambridge,CA: Cambridge University Press.Sassen seeks to integrate previous theoretical and empiri-cal perspectives on the mobility of labor and the mobilityof capital in order to understand recent trends in immigra-tion to the United States and the impact of these trends onU.S. cities. The internationalization of capitalist produc-tion, according to Sassen, has disrupted traditional laborstructures. In the third world, direct foreign investmentfostered the growth of export-led manufacturing indus-tries. Frequent layoffs resulting from insecuremanufactur-ing jobs have created a large supply of female migrantworkers, many of whom were previously employed in thenonwage household sector. With the expansion of the ser-vice sector in the United States, many of the unemployedworkers immigrated to new global cities such as LosAngeles andNew York.The existenceof significantlysizedimmigrant communities in thesecities facilitated thislabormobility.

071. Storper, Michael, and Richard Walker. 1984. The spatialdivision of labor: Labor and the location of industries. InSunbelt/snowbelt: Urban development and regional restructur-ing, Sawers,Larry andWilliamK.Tabb,eds. NewYork:Ox-ford University Press.Theauthorsexplore theimportanceof labor to thelocationdecisions of industries.

d) Flexible Specialization and Network Theory072. Cooke,Philip,andKevin Morgan.1993.The networkpar-

adigm: New departures in corporate and regional devel-opment. EnvironmentandPlanningD: SocietyandSpace 11,5:543-64.Cooke and Morgan provide a regional perspective on theliterature surrounding network theory. As the authorspoint out, the network perspective on economic organiza-tionviews decentralized networksas organizational alter-natives that lie somewhere between Williamson’s (1975)marketsandhierarchies. Networksrely onlocational prox-imity to reinforce trust relationships between thoseinvolved in economic exchange. The key features of a net-worked region are strong public and private industrialsupport institutions, channels for the rapid diffusion of technology, a high degree of interfirm interactions, and acritical mass of innovation-focused firms (p. 562). Theauthors apply the network perspective to examine fourcases of intraregional interaction in Europe.

073. Dunn, Edgar S. 1970. A flow network image of urbanstructures. Urban Studies 7, 2: 239-58.

Dunn presents an early network perspective on urbanstructure by developing a typologyof networksandexam-ining the flow characteristics of each type.

074. Markusen, Ann R., Yong-Sook Lee, and SeanDiGiovanna, eds. 1999. Second tier cities: Rapid growth be-

yond the metropolis. Minneapolis: University of MinnesotaPress.

This work examines the rapid growth of the new wave of “second-tier” cities, which the authors define as “spatiallydistinct areas of economic activity where a specialized setof trade-oriented industries takes root and flourishes,establishingemploymentand population-growthtrajecto-ries that are the envy of other places” (p.3).Their theoreti-cal approach is outlined in chapters 1 through 4. Theauthors extendthe common conception of theflexiblyspe-cialized industrial district by emphasizing the role of largefirms, stateactors,localfixed capital,and theactive recruit-ment of skilled labor in district formation. A major contri-

bution of the book is to demonstrate how our traditionalconception of the industrial district is much morecomplexthan originally envisioned by Marshall (1890) andinvolves complex interactions bothwithin and outside theregion.

075. Piore, Michael J., and Charles F. Sabel.1984. The secondin-dustrial divide. New York: Basic Books.

In this book, theauthors discuss howcrises in the1970s ledto the emergence of a newform of industrial organization,referred to as “flexible specialization.” The authors pointto theMarshallian industrial districts of Italy as oneexam-ple of flexible specialization in action.

076. Porter, Michael E. 1990. The competitive advantage of na-tions. New York: Free Press.

This work addresses a topic of concern among economistssince the days of Adam Smith and David Ricardo: “Whydo some nations succeed and others fail in internationalcompetition?” (p.1).Porterarguesthattherearefourmajordeterminants of national competitive advantage in a par-ticular industry: (1) factor conditions; (2) local demandconditions; (3) related and supporting industries; and (4)firm strategy, structure, and rivalry (p. 71). Competitiveadvantage emerges from the “diamond” of these fourforces, whichmaybe catalyzedor diminished bychanceorgovernmental intervention. Among factor conditions,

basic factors such as natural resources, climate, andunskilled labor have become less important than special-ized advanced factors such as communications infrastruc-ture and highly educated workers. Often, scarcity in basicfactors can even act to spur the emergence of certainadvanced factors through innovation in response toresource scarcity. Local demand, when it is discriminatingandanticipatoryof buyers’needsinternationally, preparesandpressures local firms to innovate, thuspreparing themto meet the needs of export markets. The presence of localinternationally competitive suppliers helps to spur inno-vations in relatedindustries.Also, having a healthysupply




of local inputs helpsto reduce transaction costs by facilitat-ingfrequent intrafirm interactionsand informationflows.

077. Saxenian, AnnaLee. 1994. Regional advantage: Culture andcompetition in Silicon Valley andRoute 128. Cambridge, MA:Harvard University Press.

Saxeniancompares therecentgrowthtrajectoriesof SiliconValley and Boston’s route 128. While both were high-techcenters in electronics during the 1970s, only Silicon Valleyemerged from a regional recession in the 1980s to becomean international leader inthehigh-techindustry. Thisworkexamines the causes of thesedivergent growth trajectoriesand concludes that the differences have been primarilyattributable to differences in the nature of industry struc -ture within the two regions. Silicon Valley’s industry wasdefined by densesocialnetworksbased onflexiblespecial-ization and entrepreneurship. In contrast, Route 128 wasdominated by a small number of hierarchically integratedfirms that valued secrecy and independence.

078. Scott, Allen J. 1992. The collective order of flexible pro-ductionagglomerations:Lessons for local economicdevel-opment policy andstrategicchoice. EconomicGeography68,3: 219-33.

The author discusses the institutional dimension of flexibly specialized networks and asks, “What constitutes anoptimal combination of competition and cooperation inmodernflexibleproductionagglomerations?” (p.220). Theexplanation hinges on a departure from transaction costtheory, which views institutional arrangementsas transac-tion-cost-minimizing devices. This theory views the opti-mal design of a network, or any form of organization, as a

balance between the incentive mechanisms from competi-tive structures while minimizing the governance costs of large Fordist bureaucracies. Scott points to five types of

networks that have been shown to be successful in per-forming this task: (1) the public provision of innovationcenters, (2)collective institutionsthat facilitate theupgrad-ing of labor skills (e.g., local universities, apprenticeshipprograms, and labor unions), (3) business associations thatprovide marketing and other business services to local

business agglomerations, (4) just-in-time processing net-works, and (5) local land use regulatory institutions.

079. Storper, Michael. 1997. The regional world: Territorial devel-opment in a global economy. New York: Guilford.

This edited volume of Storper’s works gives an overviewof recent work on regionalism. Storper argues that theregion is the locus of “untraded interdependencies, whichtake the form of conventions, informal rules, and habitsthat coordinate economic actors under conditions of uncertainty” (p. 5). The author builds on earlier works inthe network theory tradition by examining the specificinstitutional arrangements that sustain and facilitate thegrowthof network-basedregional economies.Throughoutthis work, he argues that capitalist development is adynamicprocessof introducingvariety to facilitate knowl-edge sharing and eliminating variety to reduce costs (p.

290). In the development of his theoretical perspective,Storper draws on organization theory and economics toexpand on the traditional ideas formulation by networktheorists.

e) Marxist Theory

080. Castells, Manuel. 1972. The urban question. London: Ed-ward Arnold.Castells presents an overview of the Marxist perspectiveon urban and regional development by pointing to recentempirical dataon urbanizationin the industrialized worldand the developing world. In chapter 2, he argues that theemergence of large metropolitan regions in the UnitedStates andFrance is thecombined result of themonopolis-ticconcentration of capitalandthefunctional separation of large units of production. In chapter 3, Castells examinesthe underdevelopment of particular world regions andarguesagainst theperspective thatviews urbanizationas a“mechanical consequence of economic growth, and, inparticular, of industrialization” (p. 40). Instead, Castellsargues that underdeveloped regions have experienced

fundamentally different growth histories than industrial-ized regions. The modern problem of underdevelopmentcan only be understood in terms of the historical develop-ment of the capitalist mode of production.

081. Edel, Matthew. 1996. Urban and Regional Economics—MarxistPerspectives. In Regionaland urbaneconomics,Pt.2,Richard Arnott, ed. Amsterdam: Harwood.This article provides a comprehensive overview of theMarxist perspective in urban and regional economics.

082. Friedmann, John. 1979. On the contradictions betweencity and countryside. In Spatial inequalities and regional de-velopment, Hendrik Folmer and Jan Oosterhaven, eds.

Boston: Martinus Nijhoff.Friedmann applies the Marxistperspective in an examina-tionof the relationship between urbanized areas and ruralareas. He examines this relationship as a contradiction

between opposing, but potentially complementary, socialforces. For Friedmann, the contradictions between the cityand the countryside are fundamentally contradictions

between functional (interest-based) forms of social inte-gration and territorial (geographic and historical) forms of social integration.

083. Goodman, Robert. 1979. The last entrepreneurs: America’sregional wars for jobs and dollars. New York: Simon &Schuster.

The author draws on a Marxian perspective to describehow businesses have managed to maintain a “reservearmy” of low-paid and unemployed workers that have

been exploited for the purposes of imposing discipline onexisting high-wage workers. Goodman argues that recenttrends in business location within U.S. regions resemble apattern similar to crop rotation. By threatening to relocateto other regions, businesses have created more favorableconditions for themselves.




084. Gordon, David M. 1977. Class struggle and the stages of American urban development. In The rise of the Sunbelt cit-ies, David C. Perry and Alfred J. Watkins, eds. BeverlyHills, CA: Sage.

In a traditional Marxist perspective on the emergence of Sunbelt cities in the United States, Gordon begins by cast-ing the neoclassical concept of efficiency in Marxist terms.At any given time in history, a production process can beeither quantitatively efficient orqualitatively efficient. Theformer refers to creating the largest output from the leastcostly inputs, whereas the latter refers to the reproductionof class relations specific to a particular mode of produc-tion (p. 58). Initially, capitalists searched for quantitativelyefficient processes, but thosemost likely to survivebecamethose that facilitated maximum control over workers andwere thus qualitatively efficient. Applying this concept tocities, Gordon defines three stages of capital accumulationthat have produced specific patterns of urban develop-ment, which Gordon refers to as the commercial city, theindustrial city, and the corporate city. The struggle

between owners and workers over the ownership of pro-duction and the underlying contradictions of capitalistaccumulation act topropel citiesfromone stage tothe next.New Sunbelt cities have developed aspatial structure thatfacilitates the most qualitatively efficient form of workercontrol in the current stage of capitalism. By moving toGreenfield areas in the Sunbelt, capitalists could escapeentrenched central city labor unions and establish newforms of worker control in the Sunbelt suburbs.

085. . 1971.General perspectives. . . radical,liberal, andconservative. In Problems in political economy: An urban per-spective, David M. Gordon, ed. Lexington, MA: D. C.Heath.

In thisedited volume of works onurban political economy,

David Gordon outlines the features of the “radical” Marx-ist perspective for analyzing urban political economies.The Marxistperspective examinesurban and regional eco-nomic change as resulting from thehistorical evolution inasociety’s dominant mode of economic production (p. 3).Social change is viewed in terms of the inherent conflicts

between the capitalist class and the worker class. In thisview, the modern state is viewed as an instrument of capi-talist accumulation rather than a potential source of laborreform, as in the liberal view.

086. Harvey, David. 1985. Theurbanizationof capital. Baltimore: Johns Hopkins University Press.

Harvey was one of the early authors to introduce Marx toregional development studies. Chapter 1 provides adescription of theprimary, secondary, andtertiaryflows of capital. Theprimary circuit refers to theproduction of sur-plus value within any given time period. The secondarycircuitrefersto theproductionof surplusvalueduring sev-eral periods through investments in fixed capital and theconsumption fund. The fixed nature of secondary circuitinvestments is of central importance to Harvey, becausethese investments by definition are much more difficult to

adjust within any given time period. Broadly speaking,flows of capital will tend toward overaccumulation in theprimary circuit and underaccumulation in the secondarycircuit due to the difficulty of capturing all value associ -atedwith the latter. State and financial institutionsemergeas intermediaries to facilitate the flow of capital from theprimary to the secondary circuit. The final tertiary circuitrefers to the flow of investments in science, technology,

and human capital. Like flows in the secondary circuit,capitalists tend to underinvest in thiscircuitwithout inter-mediation by the state.

087. Holland, Stuart. 1979. Capital, labor and the regions: As-pects of economic, social and political inequality in re-gional theory and policy. In Spatial inequalities and regionaldevelopment, Hendrik Folmer and Jan Oosterhaven, eds.Boston: Martinus Nijhoff.

This chapter is an elaboration of the author’s earlier workusing a diagrammatic approach.

088. . 1976. Capital versus the regions. London:Macmillan.

Holland critiques the existing state of regional develop-ment theory andpresents the Marxian “Imbalance” theoryas an alternative perspective. The basic arguments of thisperspective are laid out in chapter 2 of this book; chapter 1considers alternative perspectives, and chapters3 through8 elaborate on the ideas developed in chapter 2.

089.Markusen, Ann.1987. Regions:Theeconomicsandpolitics of territory. Totowa, NJ: Rowman and Littlefield.

This book is a companionwork to Markusen’s Profit Cycles(1985). Here, she focuses on the political dimensions of regional development in the United States. In chapters 1through 3, Markusen argues that U.S. regionalism has

emerged primarily from economic differentiation created by the uneven spread of capitalism. This has in turn beenreinforcedby theU.S.federalsystem of government.Muchof thework focuses on the factors thatgive rise to regionalpolitical conflicts. The author also elaborates on the politi-cal thesis, however, by examining how politics, in turn,affect regional growth. Regional politics may foster aregion’s integration into the larger capitalist system or itmay foster a divergent path.

090. Massey, Doreen. 1984. Spatial divisions of labour: Socialstructures and the geography of production. London:Macmillan.

The author uses a Marxist perspective to explore the link between the spatial organization of capitalism and thesocial division of labor. Massey’s basic argument is thatdistance and spatial differentiation are strategic devicesemployed by capitalists to facilitate capital accumulation.The use of spatial strategies to take advantage of the laborforce’s differentiation results in patterns of uneven devel-opment across regions (chap. 3). In chapters 2 and 3,Massey examines three types of spatial organization todetermine how each affects (and is affected by) different




patterns of regional social relations. In chapters 4 through6, Massey examines how this spatial division of labor hasevolvedandaffectedparticulargroupsdifferentially in theUnited Kingdom since the 1960s.

091. The Review of Radical Political Economics. 1978. Special is-sue on “Uneven Regional Development” 10, 3.Several articlesin this issueprovide anoverviewof thekey

arguments from the Marxist perspective on regional eco-nomic development.

092. Smith, Neil. 1984. Uneven development. Oxford: BasilBlackwell.Chapter 5 of this work establishes a theory of unevendevelopment. Smith develops a view of urban develop-ment that isbasedonthe seesawprocessof investment anddisinvestment at different spatial scales. The most pro-nounced scale is theurbanenvironment, whose rent valueis manipulated, according to Smith, to ensure capitalistaccumulation. In contrast to the neoclassical economicview, which sees development as progressing towardequalization, Smith sees this tendencyas an inherent para-dox in capitalism that does not produce even patterns of development but instead produces seesawing waves of development and underdevelopment. As urban areas aredeveloped to accumulate profits, their values rise. How-ever, due to the spatial fixity of the investments and theincreased competition from new entrants, theseprofits areunstable. Once profits begin to fall, areas are completelyabandoned for new locations in the search for profits.

093. Watkins, Alfred J., and David C. Perry. 1977. Regionalchange and the impact of uneven urban development. InThe rise of the Sunbelt cities, David C. Perry and Alfred J.Watkins, eds. Beverly Hills, CA: Sage.The authors summarize some of the major theoretical per-spectives on the recent emergenceof rapidly growingSun-

belt cities along the U.S. southern perimeter. Emergent cit-ies such as those in the Sunbelt grow by enacting barriersthat limit the growth of smaller cities, thereby facilitatingcapital accumulation. However, as industrial structureevolves from one epoch to another, the barriers erected bygrowing capitalist cities become inflexible and may act torepel new emergent industries that no longer benefit fromthe barriers erected during previous epochs.

4.POLITICALINSTITUTIONSANDREGIONALECONOMICDE-VELOPMENT

a) Growth Machine Theory

094. Cronon, William. 1991. Nature’s metropolis: Chicagoand the great American West. New York: Norton.Cronondiscusses the role of boosterism and “frontier eco-nomics” in the development of the city of Chicago. Chap-ter1 innovativelyties the theoriesof boosterismto theoriesof natural advantages and resource endowments to dis-cuss how natural resources and land interact with boosterideals to produce city growth.

095. Logan, John, and Harvey Molotch. 1987. Urban fortunes.Berkeley: University of California Press.

In chapter 3 of this work, the authors elaborate on thegrowthmachineconceptoriginallydevelopedby Molotch.The impact of the “growth ethic” on various communityinstitutionsis examined.The authorsalso presenta histori-cal analysis of the development of growth machines inAmerica. The evolution of growth machines and theuneven distribution of growth are discussed.

096. Logan, John R., Rachel Bridges Whaley, and KyleCrowder. 1999. The character and consequences of growthmachines: An assessment of twenty years of research. InThe urban growth machine: Critical perspectives, two decadeslater, Andrew E. G. Jonas and David Wilson, eds. Albany:State University of New York Press.

This review is particularly useful, because it links growthmachines to economic outcomes. If the growth machineperspective is to be a useful contribution to the theory of regional economic development, then growth machinesmust have an impact on the interregional distribution of economic activities. The authors conclude that while theimpact of pro-growth policies is mixed, growth-controlpolicies do not seem to significantly affect populationgrowth rates. This suggests that the growth machine per-spective is a more useful theoryof why political coalitionsformthan a theory of howgrowthcoalitions affect regionaleconomic outcomes.

097. Molotch, Harvey. 1976. The city as growth machine: To-warda political economy of place. American Journal of Soci-ology 82, 2: 309-32.

This classic article establishes the basic propositions of thegrowth machine perspective. Simply put, this theoryargues thatcoalitions of political andeconomicelites work

to mobilize the regional population toward strategies thatpromote, rather than discourage, regional economicgrowth and development.

098.Wolman, Harold.1996. The politics of local economicde-velopment. Economic Development Quarterly 10, 2: 115-50.

The politicsof local economicdevelopment policy makingare examined, and recent research related to the growthmachine and other related perspectives are reviewed.

b) The New Institutional Economics

099. Coase, Ronald H. 1937. The nature of the firm. Economica4, 16: 386-405.

This classic in the field of institutional economics is notabout regional development theory per se, but Coase’sviews of the nature of the firm have proved to be funda-mental in shaping the future work of seminal authors inthis perspective. The essence of Coase’s argument is thatvarious forms of internal economic organization can betraced to thedesireamong owners tominimizethe transac-tion costs of production.For transactions that involve sub-stantial uncertainties and for which contractual monitor-




ing costs are prohibitively high, vertically integratednonmarket institutionsmayhavecost savings overmarketforms of organization.

100. Eggertsson, Thrainn. 1990. Economic behavior and institu-tions. Cambridge, UK: Cambridge University Press.An excellent introduction to the literature known as thenew institutional economics. This exposition is particu-

larly useful because it focuses on the relationship betweeninstitutional change and economic development.

101. North, Douglass C. 1991. Institutions. Journal of EconomicPerspectives 5, 1: 97-112.In this essay, North elaborates on the role of institutions ineconomic development. Institutions, according to North,serve to reduce the transaction costs associated withengaging in economic exchange by increasing the social

benefits of long-term cooperation. The institutions of capi-talism have grown increasingly more complex due to theincreasing complexity of economic exchanges. Institu-tional adaptation may either promote or discourage eco-nomic development. If the institutions that evolve are

incompatiblewiththe transaction costdemands of privateinvestors, then a region may not grow. For example, if theproperty rights structure of a society does not recognizeprivate contracts among economic agents, informal formsof governance may emerge to facilitate the capture of short-term profits among established elites while alsoserving to exclude outside investors. Similarly, large verti-cally integrated firms mayemerge to monitorwagelabor if contracts with external suppliers are not recognized.

102. . 1990. Institutions, institutionalchange,andeconomic performance. Cambridge,UK:CambridgeUniversity Press.North applies the insights of Williamson (1975, 1985) andCoase (1937) toproposea theoryofeconomicdevelopmentthat is based on institutional adaptation and change. Theessence of his argument is that political and economicinstitutions emerge primarily to resolve transaction costdilemmas.The institutionsthat emerge establishthe“rulesof the game” for economic exchange and determine theexpected private returns from investments in the localeconomy.

103. Williamson, Oliver E.1985. Theeconomicinstitutionsof cap-italism. New York: Free Press.

104. . 1975. Markets and hierarchies: Analysisand antitrustimplications. New York: Free Press.Williamson’s work reintroduced the ideas of Coase (1937)to a more recent generation of scholars and formalized theconceptof “transactioncosts.”In thesetwo seminal works,Williamson argues that transactions arise from one of twosources: bounded rationality and opportunistic behaviorof contractual agents. Furthermore, these conditions

become more problematic for exchange relationshipswhen parties to an exchange use specific assets whosevalue is limited outside the scope of the immediateexchange relationship. Williamson establishes a typology

of organizational forms ranging from market to hierarchythat correspond to particular transaction cost dilemmas.

5. EMERGING NEOCLASSICAL PERSPECTIVES

a) Endogenous Growth Theory

105. Annals of Regional Science 1998. 32, 1.A special symposium on regional endogenous growththeory.

106. Arrow, Kenneth J. 1962. The economic implications of learningbydoing. ReviewofEconomicStudies29,3: 155-73.Arrow was the first to point out that production costs maydecline over time as firms gain experience in the produc-tion process. Romer (1986) later relies on this concept of “learningbydoing”todevelopaneconomicgrowthmodelwith endogenous technical change.

107. Aschauer, David Alan. 2000. Do states optimize? Publiccapital and economicgrowth. Annals of Regional Science34,3: 343-63.An extension of Barro’s (1990) endogenous growth modelwith public capital investment. An empirical test of themodel using datafromstates within theUnited States from1970 to1990suggests that thereis a positive nonlinear rela-tionship between public capital investment and economicgrowth.

108. Barro, Robert J. 1990. Government spending in a simplemodel of endogenous growth. Journal of Political Economy98, 5: S103-25.This article develops an endogenous growth model thatincorporates tax-financed public services. With a Cobb-Douglasproduction function, there is a nonlinear relation-ship between public investment and private output.

Increases in government spending raise the marginal pro-ductivity of capital and labor, assuming a small to moder-ate ratio of government spending to total output. If thisratio becomes too large, the distortional effects of taxationpredominate and lead to a declining growth rate.

109.Button,Kenneth.1998. Infrastructureinvestment, endog-enous growth, and economic convergence. Annals of Re-

gional Science 32, 1: 145-62.This article provides a review of evidence linking publicinfrastructure investment to regional economic growth.The author concludes that the evidence supporting thislink at the regional scale is still far from conclusive, sug-gesting that policy prescriptions based on these studies

may be premature.110. Cass, David. 1965. Optimum growth in an aggregative

model of capital accumulation. Review of Economic Studies32, 3: 233-40.Cass and Koopmans (1965), using an intertemporal utilityfunction proposed by Ramsey (1928), incorporate a vari-able savings rate into the Solow-Swan model of economicgrowth. The incorporation of a savings rate that is deter-




mined by household choice places the Ramsey-Cass-Koopmans model in the class of more recent endogenousgrowth models that allow growth parameters to be deter-mined inside the model. Under certain conditions, themodel predicts conditional convergence over time. If thesavings rate rises with the capital/labor ratio, then themodel predicts a slower speed of convergence than theSolow-Swan model (Barro and Sala-i-Martin 1999).

111. Glaeser, Edward L., Hedi D. Kallal, Jose A. Scheinkman,and Andrei Shleifer. 1992. Growth in cities. Journal of Politi-cal Economy 100, 6: 1126-52.Although this is primarily an empirical work, it succinctlycompares and contrasts three paradigms for the genera-tion of knowledge and ideas incities. One is thetraditionalSchumpeterian (1947) view, which has come to predomi-nate the endogenous growth literature. In this view, con-centrations of similar firms within the same industry helpthe industry, and hence, the city grow, due to the internal-ization of knowledge spillovers. Another view is thatadvocated by network theorists, such as Michael Porter(1990), who view intense competition by the same firms

within a local industry as the primary engine of economicgrowth.Finally, theviewof Jacobs (1969) is somewhatof ananomaly in that sheargues that thediversity ofmany firmsin different industries helps to facilitate thetransmissionof complementary innovations across industries. Glaeseret al. test each of these three theories and find that localcompetition and urban variety rather than regional indus-trial specialization contribute to employment growth,thussupporting Jacob’s views of endogenous growthgeneration.

112. Jacobs, Jane. 1969. Theeconomyof cities. NewYork:VintageBooks.AlthoughJacobs is rarelyalignedwiththe formalist practi-tioners of endogenous growth theory, herideas on the roleof cities as a source of knowledge generation fits nicelywithin the tradition of endogenous growth theory. In thisclassic text, Jacobs argues that the diversity of the urbaneconomy is an endogenous source of innovation andknowledge transfer. Unlike other authors, particularlySchumpeter (1947), whopoint to the role of large monopo-lies in spurring innovation, Jacobs argues the opposite.Instead, local competition serves as a catalyst to technol-ogyadoptionand diffusion.In thissense, Jacobs focuses onthe role of Hoover’s (1937) urbanization economies as theengine of growth.

113. Koopmans, Tjalling C. 1965. On the concept of optimal

economic growth. In The econometric approach to develop-ment planning . Pontificae Academiae Scientiarum ScriptaVaria No. 28. Amsterdam: North Holland.

114. Martin, Ron, and Peter Sunley. 1998. Slow convergence?Thenewendogenousgrowththeoryandregional develop-ment. Economic Geography 74, 3: 201-27.The authors of this article provide an overview of endoge-nous growth theory and its applicability to theories of

regional economicgrowthand theconvergenceof regionalper capita incomes and output. The authors begin byreviewing recent literature that suggests that regional con-vergence is slower and more discontinuous than theorymight suggest. The usefulness of endogenous growth the-ory to explain these empirical findings is discussed.Although endogenous growth theoryis seen as a welcomeinnovation in regionalgrowthstudies,the approachis crit-

icized for its overemphasis on formalism and ignorance of socioeconomic institutions.

115. Nijkamp, Peter, and Jacques Poot. 1998. Spatial perspec-tives onnewtheoriesofeconomicgrowth. The Annals ofRe-

gional Science 32, 1: 7-37.This article gives a comprehensive overview of neoclassi-cal growth theory, including its exogenous and endoge-nous branches, and explores how to incorporate endoge-nous technicalchange intoa regionalgrowthmodel.Whenspatial interactions across regions are incorporated intotheir regional endogenous growth model, the empiricalimplications of the model are indeterminate. Dependingon the specification of the model, absolute convergence,

conditional convergence, and divergence are all theoreti-cal possibilities.

116. Ramsey, Frank. 1928. A mathematical theory of saving.Economic Journal 38, 152: 543-59.Barro and Sala-i-Martin (1999) point to Ramsey (1928) asthestartingpoint formodern economicgrowththeory. Thekey contribution of Ramsey’s work is the development of an intertemporally separable utility function. This devel-opment allows for the incorporation of a variable savingsrateinto theSolow-Swanmodel,which assumesa constantsavings rate over time.

117. Richardson, Harry W. 1973. Regional growth theory. Lon-

don: Macmillan.Although Richardson is usually not credited with contrib-uting to the endogenous growth literature, his reducedform model of regional growth allows for endogenoustechnical change. Unlike endogenous growth models, hismodel incorporates agglomeration economies and otherspatial factors.

118. Romer, Paul M. 1986. Increasing returns and long-rungrowth. Journal of Political Economy 98, 5: 71-102.Romer extends the “learning-by-doing” model, proposed

by Arrow(1962), to examine endogenous technicalchangewithin a competitive general equilibrium model.

b) The New Economic Geography119.Dixit, Avanish K.,andJoseph E. Stiglitz. 1977. Monopolis-

tic competition and optimum product diversity. AmericanEconomic Review 67, 3: 297-308.This general equilibrium model of monopolistic competi-tion provides the foundation for later models in the neweconomic geography as well as more recent models in thenewgrowth theory literature.Essentially, the Dixit-Stiglitz




model, like the Romer model (1986) discussed in theendogenous growth theory literature, allows increasingreturns to be incorporated into a general equilibriumframework in a manner that is mathematically tractable.

120. Fan, Wei, Frederick Treyz, and George Treyz. 2000. Anevolutionary new economic geography model. Journal of Regional Science 40, 4: 671-95.

In this article, the authors present a generalized version of the new economic geography model that allows forworker mobility across regions and sectors, introduces amore prominent role for land use, and provides a morerealistic model of geographic space that allows for multi-ple regions in oneor twodimensions. Theauthors demon-stratethe usefulness of themodelin evaluating policy pre-scriptions with an example based on transportation costreductions. As transportation costs decrease, industriesthat use a large number of intermediate inputs relative toland tend to cluster together.

121. Fujita, Masahisa, Paul Krugman, and Anthony J.Venables. 1999. Thespatial economy: Cities, regions,and inter-

national trade . Cambridge, MA: MIT Press.This book, a more formalexposition of the ideas originallydeveloped in Krugman (1991), also gives an overview of the theoretical and empirical literature on which the neweconomy geography is based.

122. Glaeser, Edward L. 1994. Cities, information, and eco-nomicgrowth. Cityscape: AJournal of Policy DevelopmentRe-search 1, 1: 9-48.This article provides an excellent discussion of the impor-tance of information to thegrowth anddevelopment of cit-ies. Since theliterature reviewed by Glaeser spans both thenew endogenous growth theories and the new economicgeography, the article provides a useful framework forthinking about linkages between these two bodies of theory.

123. Henderson, J. Vernon. 1996. Ways to think about urbanconcentration: Neoclassical urban systems versus the neweconomic geography. International Regional Science Review19, 1-2: 31-36.Thisbrief articlecompares theneweconomicgeography toHenderson’s urban systems approach.

124. International Regional Science Review 22, 2: 1999.

125. Krugman, Paul. 1999. The role of geography in develop-ment. International Regional Science Review 22, 2: 142-61.

Several articles from the World Bank’s Tenth Annual BankConference on Development Economics are presented inthis special issue. The article by Krugman suggests thatrecent models examining the role of geography in the eco-nomic development process have generally taken one of two approaches. The “predestination”approachexplicitlyconsidersthe role of geographic factorssuchas climateandtopography in determining patterns of regional growthand decline. The “self-organizing” approach asks why

regional economies experience such different patterns of economic growth when there are no apparent geographicdifferences between regions. Krugman concludes by dis-cussing whyit is often so difficult to draw policy prescrip-tions from models linking geography and development.For new economicgeographers, the primary difficulty liesin the fact that the models are highly stylized versions of reality with outcomes that arevery sensitive to alternative

assumptions and model specifications.126. . 1991. Geography and trade. Cambridge, MA: MIT

Press.

The basics of the new economic geography are presentedin an easy-to-read narrative framework that is based onseveral lectures given by Krugman on the topic. Krugmanalso examines other models and emphasizes the impor-tanceof laborpooling and proximity to intermediategoodsuppliers on the emergence of regional clusters.

127. Neary, J. Peter. 2001. Of hype and hyperbolas: Intro-ducing the new economic geography. Journal of EconomicLiterature 39, 2: 536-61.

A review of the theoretical and empirical literature sur-rounding the new economic geography. This article con-cludes with a discussion of policy implications and issuesrelated to empirical testing of the new economicgeography.

128.Pred, Allan. 1966. The spatial dynamics of U.S.urban-indus-trial growth . Cambridge, MA: MIT Press.

In chapter 2, Pred combines the export base concept withthe cumulative causation argument to demonstrate howtheexport basemultiplier mayexpand along withregionalgrowth (Fujita et al. 1999).

6. CONCLUSION: TOWARD AN INTEGRATED THEORY OF REGIONAL ECONOMIC DEVELOPMENT

129.Acs, ZoltanJ.,and Attila Varga.2002.Geography, endoge-nous growth,and innovation. International RegionalScienceReview 25, 1: 132-48.

The authors survey the new economicgeography, endoge-nous growth theory, and the literature surrounding theeconomics of innovation. They argue that the new eco-nomic geography provides an explanation for the spatialcomponent of regional growth, but its consideration of innovation processes is incomplete.Similarly, endogenousgrowth theory provides an explanation for regionalgrowth,but until recently, has tended to ignorespatial con-siderationsandinstitutions. Finally, theeconomics of inno-vation give an account of the innovation process withoutexamining economic growth or space. The authors con-clude that a “technology-led” theory of regional growthand decline requires elements from all of theseperspectives.

130.Bretschger, Lucas. 1999. Knowledgediffusion and thede-velopmentof regions. Annals ofRegionalScience33,3:251-68.




in preparation for the eventual expansion of productivecapacity (Guild 2000).

141. Isserman, Andrew. 1995. State development policy andpractice in the United States of America. International Re-

gional Science Review 16, 1-2: 49-100.

Isserman examines the literature on state economic devel-opment programs to determine their form and impacts.

142. Massey, Doreen. 1979. In what sense a regional problem?Regional Studies 13, 2: 233-43.

In this article, Massey challenges the common conceptionof regional inequality by arguing that the problem is notpurely geographic. Rather, it is a problem related to thespatial division of labor discussed in her book with thesame name. Massey discusses regional inequality as itrelates to the relative attractiveness of different regions foreconomic activity. This relative attractiveness results ininter- and intrasectoral differentiation, with the morerecent changes occurring within the latter, as industry hassought to separate itself from unionized labor forces inolder industrial cities. The implications of her argumentsare many. First of all, regional inequality is an issue of thedifferentiation in production, of which geographic differ-entiationis butone of many means.Second, trends towardthe convergence or divergence of interregional equalitymeasures should be viewed in light of the historical struc-tural changes in the evolution of capitalist production.Current sources of differentiation only became possiblethroughpreviousstructuralshifts. Moreover, convergencedoes not necessarily imply an end to regional inequality.Instead, the underlying nature of regional inequality itself may be changing (p. 241). Finally, the implications forregionalpolicyarethat issues of regional inequality cannotsimply be addressed by shifting industries around.

Instead, policy must focus on the nature of productionitself and not simply the spatial or sectoral distribution of production.

143. Noyelle, Thierry J. 1983. The rise of advanced services:Some implications for economic development in U.S. cit-ies. Journalof the AmericanPlanningAssociation49,3:280-90.

This article discusses the economic development policyimplications of the findings from Noyelle and Stanback’s(1983) The Economic Transformation of American Cities. Animportant point made by Noyelle is that “services” are byno means a homogeneous category confined to consumer-oriented services. In fact, much of the recent shift toward aservice-based economy in manyU.S. regions can be attrib-utedto theriseof services thatcomplementmanufacturingproduction. Advertising is offered as an example. Noyellealso argues that some cities have grown advanced service-

based export economies, while other cities have emergedprimarily to serve home markets and/or outside metro-politan areas. The central issue for economicdevelopmentplanners is how to promote the growth of an advancedexport servicesector in theselatter“dependent” metropol-itan areas. Regarding the appropriateness of particular

economicdevelopment policy instruments, Noyelle offerstwo suggestions: (1) the appropriate instruments willvarywith the nature of the metropolitan area and the relativematurity of its advanced service sector, and (2) given thedependence of theservice sector on themanufacturingsec-tor, anemphasison thegrowthof a vitalservice sectorneednot necessarily be a substitute for a policy focusing onmanufacturing jobs. The main point, however, is that the

service sector should not be overlooked as a potentialengine for metropolitan growth.

144.Oates,WallaceE., andRobert M.Schwab.1988. Economiccompetition among jurisdictions: Efficiency enhancing ordistortion inducing? Journal of Public Economics 35, 3: 333-54.

The authors examine the relative efficiencies of local gov-ernmentcompetition fornewindustry. By setting a taxrateon mobile capital and a standard for environmental qual-ity, local governments induce newindustries to enter their

jurisdictions for the purposeof raisingwages. The primaryresultof theiranalysis is thatfor homogeneous labor popu-lations, jurisdictions choosing these policies under major-ity rule will choose zero tax rates on capital and standardsthat equate marginal benefits with the marginal costs of environmental quality. Distortions arise when the popula-tion isnothomogeneous orwhen thereareincentives tosetpositive tax rates on capital. These distortional possibili-ties are not trivial given the environment-versus-jobsdebates that are common in many local communities.

145. Richardson, Harry W. 1979. Aggregate efficiency and in-terregional equity. In Spatial inequalitiesandregionaldevelop-ment, Hendrik Folmer and Jan Oosterhaven, eds. Boston:Martinus Nijhoff.

Richardson gives an overview of the efficiency-versus-

equity debate in regional planning. After reviewing themajor issues surrounding thisdebate, thisarticleexaminesseveral cases when the two goals may be compatible.

146. Stiglitz, Joseph E. 1989.Markets, market failures, and de-velopment. American Economic Review 79, 2: 197-203.

Stiglitz presentsa review of recent thinking in theeconom-ics of information to identify several market failure expla -nations for the underdevelopment of third world nations.The market failures examined by Stiglitz are primarilythose having to do with costly and imperfect information.With imperfect information, an innovator may gainmonopoly profits following an innovation even thoughknowledge is a public good, since knowledge spilloversmaybe imperfect.Furthermore, if learningand technologi-cal change are highly localized, then the spillover benefitsof knowledgecreation may notextend beyondthe bordersof the innovating nation. Unfortunately, as Stiglitz argues,the nonmarket institutions that have emerged to combatthese issues in many less-developed nations have beensimilarly inefficient in creating and internalizing the bene-fits of knowledge creation and diffusion. This is primarilydue to thefact that governments face thesameinformation




problems faced by private actors. Stiglitz concludes bysuggesting that governments be more selective whenchoosing forms of nonmarket intervention to spurdevelopment.

147. Stohr, Walter, and Franz Todtling. 1979. Spatial equity:Some anti-theses to current regional development doc-trine. In Spatial inequalities and regional development,

Hendrik Folmer and Jan Oosterhaven, eds. Boston:Martinus Nijhoff.

Stohr and Todtling examine why regional policies gearedtoward improving regional and interregional inequitieshave been largely unsuccessful. The authors attribute partof the problem to the inadequacy of existing theory toinform regional development practice. In the field, eco-nomic development practice has been impaired by theoverreliance on vertically integrated organizations andfirms in the implementation of development policy, anoveremphasis on market-oriented processes and formalinstitutional supports, and an overemphasis on materialneeds versus nonmaterial needs. The authors proposeinstead a policy of “selective spatial closure” (p. 153). Thistypeofpolicy would imply “regionalco-determination” asa strategy for insulating regions from external demandfluctuations. Examples include the communal control of natural resources and the introduction of “regionally ade-quate” technology (p.154).On thedemand side, Stohr andTodtling advocate policies that foster the emergence of diverse and differentiated preferences. Finally, they advo-cate policies designed to improve access from hinterlandareasto core areasand other tax andsubsidemeasures thatcompensate for differential levels of intraregionalaccessibility.

148. Thompson, Wilbur R. 1975. The national system of citiesas an object of public policy. In Regional policy: Readings intheory and applications, John Friedmann and WilliamAlonso, eds. Cambridge, MA: MIT Press.

Thompson examines the role of cities in national policymakingfrom theperspective of city size. On theonehand,while the scale economy benefits of size are U-shaped, the

benefits of diversity may grow without bound. Further-more, high-income persons may benefit more from con-sumer variety vis-à-vis cost reduction relative to low-income persons, so increased city size may disproportion-ately benefit upper-income persons. From a policy per -spective, Thompson’s primary interest is the issue of migration. Given the costs and benefits of city size andgiven the types of people most likely to migrate fromsmallercities to another, whenshould we justify migrationfrom urban to rural areas or vice versa as a policy goal?Regarding this issue, Thompson argues that if a place of outmigration is in a state of diminishing returns and theplace of inmigration in a state of increasing returns, thenmigration from the former to the latter is clearly justified.The more difficult issue is whether to justify migrationfrom moderatelysmall towns toverylargecities.Those left

behind in the small city may face lower product diversity

and higher costs in goods and services subject to econo-miesof scale, whereas cities mayfaceincreased congestionand pollution with inmigration. In this case, Thompsonargues that thesocial costs of leaving small townsforlargeurban areas areunderstated relative to social costs (p. 532).Regarding thegrowthpolestrategy, Thompsonarguesthatdiverting growth toward small potential urban centersrisks the possibility that these areas may not develop into

vibrant centers, thus leaving those newmigrants worseoff and no one better off. Furthermore, if the potential urbancenters are already growing at an efficient rate, fosteringfaster growth may cause diseconomies such as housingshortages and traffic congestion.

E. Other Reviews of the RegionalDevelopment Theory Literature

149. Feser, Edward J. 1998. Enterprises, external economies,and economic development. Journal of Planning Literature12, 3: 283-302.Inthis thoroughoverview of therole ofexternalscaleecon-omies in regional economic development, Feser compares

externaleconomiesto therelated, butoften misunderstoodconceptsof economies of scope, agglomeration economies,and externalities. This publication also provides a usefulsummary of the work of other seminal regional develop-ment theorists, such as Edgar Hoover, Alfred Marshall,and Alfred Weber, including more recent developments inthe industrial restructuring and flexible specializationliterature.

150. Guild, Robert L. 2000. Infrastructure investment and in-terregional development: Theory, evidence, and implica-tions forplanning. Public Works ManagementandPolicy 4,4:274-85.This article provides a concise summary of many signifi-

cant works in the regional development theory literatureto determinethe linkbetween public infrastructure invest-ments and regional economicdevelopment. Guild focuseson impacts related to sectoral development and socialdevelopment. Regarding the former, infrastructure is seenas an input into the production process, affecting the pro-ductivity of otherproductive inputs, andloweringconges-tion costs. Infrastructure investments affect social devel-opment through income effects and impacts on access toneeded facilities andservices. Guild concludes by drawingon thework of Niles Hansen (1965) to explore the implica-tions of infrastructure development for regionaldevelopment.

151. Higgins, Benjamin, and Donald J. Savoie. 1995. Regionaldevelopment theories and their application. New Brunswick,NJ: Transaction Publishing.This is one of the few books to provide a comprehensivesummary of the cross-disciplinary contributions toregional development theory, including perspectives fromanthropology, sociology, regional planning, and tradi-tional perspectives from the regionaleconomics literature.The second section of the book focuses on case studies of




regional planning in the United States, Europe, Canada,Australia, and in the developing world.

152. Leigh-Preston, Nancey. 1985. Industrial transformation,economic development, and regional planning. CPL bibli-ography no. 154. Chicago: Council of Planning Librarians.This bibliographic review of the regional development lit-erature provides a summary of the early classics as well as

a thorough summary of early works in the industrialrestructuring literature that addressed regional develop-ment issues.

153. Nelson, Arthur C. 1993. Theories of regional develop-ment. In Theories of local economic development, RichardBingham and Robert Mier, eds. Newbury Park, CA: Sage.This summary gives a concise overview of the regionaldevelopment theory literature from two global perspec-tives: the “development-from-above”school, which viewsregionaldevelopment of hinterland regions in terms of theflow of resources from core areas, and the “development-from-below” school, which views regional developmentas something that emerges from the local institutions cre-ated within developing regions.

III. ACKNOWLEDGMENTS

This article is an outgrowth of a research paper anddoctoral exam in urban and regional theory preparedunder thesupervision of Dr. NanceyGreenLeigh in theCity and Regional Planning Program at the GeorgiaInstitute of Technology. The author wishes to thank herfor helpful comments and assistance in the preparationof this draft. The author also wishes to thank Dr. KellyEdmiston in the Department of Economics at GeorgiaState University for providing an introduction to theregional economics literature. Three anonymousreviewers also provided helpful comments and criti-cisms.Allerrorsor omissionsaresolely theresponsibil-ity of the author.

IV. AUTHOR INDEX

Acs, Zoltan J., 129Alonso, William, 10 (1975), 135 (1968)

Annals of Regional Science, 105Arrow, Kenneth J., 106Aschauer, David Alan, 107Auerbach, Paul, 37Azis, Iwan J., 12Balassa, Bela, 3Barro, Robert J., 27 (and Sala-i-Martin, 1999), 108 (1990)Bartik, Timothy J., 136 (1990), 137 (1991)Bluestone, Barry, 62Bolton, Roger E., 138Borts, George H., 28 (1960), 29 (and Stein, 1964)Boudeville, Jacques Raoul, 39Bretschger, Lucas, 130

Button, Kenneth, 109Cass, David, 110Castells, Manuel, 80Christaller, Walter, 19Coase, Ronald H., 99Cooke, Philip, 72Cronon, William, 94Crowder, Kyle, 95

Danson, Michael W., 63Darwent, D.F., 40Devletoglou, Nicos E., 16DiGiovanna, Sean, 74Dixit, Avanish K., 119Dixon, Robert J., 34Drennan, Matthew P., 12Dunn,Edgar S.,30 (and Perloff,Lampard,andMuth, 1960),73

(1970)Eaton, B. Curtis, 17Edel, Matthew, 81Eggertsson, Thrainn, 100Fainstein, Susan S., 64Fan, Wei, 120

Ferguson, Deron, 132Feser, Edward J., 149Fisher, Joseph L., 51Fox, Karl A., 1Friedmann, John, 41 (1966), 42 (1972), 43 (1978), 82 (1979), 139

(and Weaver, 1979)Fujita, Masahisa, 121 (and Krugman and Venables, 1999), 131

(and Mori, 1998)Giarratani, Frank, 2Glaeser, EdwardL.,111(and Kallal,Scheinkman, andShleifer,

1992), 122 (1994)Goodman, Robert, 83Gordon, David M., 84 (1971), 85 (1977)Gross, Harold T., 61

Guild, Robert L., 150Hansen, Niles M., 140Harrington, James W., 132Harrison, Bennett, 62 (and Bluestone, 1982), 65 (1985)Harvey, David, 86Heckscher, Eli F., 4Henderson, J. Vernon, 50 (1974), 123 (1996)Hermansen, Tormod, 44Higgins, Benjamin, 45 (1983), 151 (and Savoie, 1995)Hirschman, Albert O., 46Holland, Stuart, 87 (1976), 88 (1979)Hoover, Edgar M., 2 (and Giarratani, 1985), 14 (1937), 51 (and

Fisher, 1949)Hotelling, Harold, 18International Regional Science Review, 124Isard, Walter, 11 (1956), 12 (and Azis, Drennan, Miller,

Saltzman, and Thorbecke, 1998)Isserman, Andrew, 141

Jacobs, Jane, 112 Johansson, Borje, 133Kaldor, Nicholas, 35Kallal, Hedi D., 111Karlsson, Charlie, 133




Koopmans, Tjalling, 113Krugman, Paul, 121 (and Fujita and Venables, 1999), 125

(1999), 126 (1991)Kumar, T. Krishna, 1Lampard, Eric E., 30Lasuen, Jose Ramon, 47Lav, Michael R., 21Lee, Yong-Sook, 74

Leigh(-Preston), Nancey Green, 66 (1994), 152 (1985)Lipsey, Richard G., 17Logan, John R., 95 (and Whaley, Crowder, 1999), 96 (and

Molotch, 1987)Losch, August, 20Markusen, Ann R., 58 (1985), 74 (and Lee and DiGiovanna,

1999), 89 (1987)Marshall, Alfred., 15Martin, Ron, 114Massey Doreen, 67 (and Meegan, 1982), 90 (1984), 142 (1979)Meegan, Richard, 67Miller, Ronald E., 12Mills, Edwin S., 21Molotch, Harvey, 96 (and Logan, 1987), 97 (1976)

Morgan, Kevin, 72Mori, Tomoya 131Moulaert, Frank, 68Muth, Richard F., 30Myrdal, Gunnar, 36Neary, J. Peter, 127Nelson, Arthur C., 153Nijkamp, Peter, 115North,DouglassC., 22(1955),23 (1956),101(1990),102(1991)Noyelle, Thierry J., 69 (and Stanback, 1983), 143 (1983)Oates, Wallace E., 144Ohlin, Bertil, 5Perloff, Harvey S., 30Perroux, Francois, 48

Perry, David C., 93Piore, Michael J., 75Poot, Jacques, 115Porter, Michael E., 76Pred, Allan, 52 (1977), 128 (1966)Ramsey, Frank, 116Rees, John, 61Richardson, Harry W., 24 (1978), 117 (1973), 145 (1979)Romer, Paul M., 118Rostow, Walt W., 53 (1956), 54 (1977)Sabel, Charles F., 75Sala-i-Martin, Xavier, 27

Saltzman, Sidney, 12Salvatore, Dominick, 9Samuelson, Paul A., 6 (1948), 7 (1949), 8 (1953)Sassen, Saskia, 70Savoie, Donald J., 151Saxenian, AnnaLee, 77Scheinkman, Jose A., 111Schumpeter, Joseph, 55 (1934), 56 (1947)

Schwab, Robert M., 144Scott, Allen J., 78Skott, Peter, 37Setterfield, Mark, 38Shleifer, Andrei, 111Smith, Neil, 91Solow, Robert M., 31Stanback, Thomas M. Jr., 69Stein, Jerome, 29Stiglitz, Joseph E., 119 (and Dixit, 1977), 146 (1989)Stohr, Walter, 147Storper, Michael, 71 (and Walker, 1984), 79 (1997)Stough, Roger, 134Sunley, Peter, 114

Swan, Trevor W., 32Swyngedouw, Erik, 68Taylor, Michael, 59The Review of Radical Political Economics, 92Thirlwall, Anthony P., 34Thomas, Morgan, 49Thompson, Wilbur R., 57 (1968), 148 (1975)Thorbecke, Erik, 12Tiebout, Charles M., 25 (1956a), 26 (1956b)Todtling, Franz, 147Treyz, Frederick, 120Treyz, George, 120Varga, Attila, 129Venables, Anthony J., 121

Vernon, Raymond, 60Walker, Richard, 71Watkins, Alfred J., 93Weaver, Clyde, 139Weber, Alfred, 13Weinstein, Bernard L., 61Whaley, Rachel Bridges, 95Williamson, Jeffrey G., 33Williamson, Oliver E., 103 (1975), 104 (1985)Wilson, Patricia, 68Wolman, Harold, 98


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